Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — EMPLOYMENT

Labour Statistics

Mr. Wareing: asked the Secretary of State for Employment what is the latest number who are now unemployed in Liverpool and on Merseyside; how many have been unemployed for 12 months or over; and if he will make a statement.

The Under-Secretary of State for Employment (Mr. Alan Clark): On 9 February the total number of unemployed claimants in the area covered by the Liverpool and Toxteth jobcentres was 15,046, and the total number in the Merseyside special development area was 141,674. The number unemployed for over 52 weeks in these areas on 12 January was 8,522, and 67,706.

Mr. Wareing: Are not these appalling figures testimony to the fact that the Government's economic recovery is far, far away from the people of Merseyside? How can the Minister's Department contemplate slashing 1,300 places from the YTS scheme, affecting places such as the Old Swan boys club in an area of particularly high unemployment within Liverpool, when there have been protestations from all and sundry, including the Bishop of Liverpool? What action will the Minister take about that, and what action are the Government contemplating to bring permanent jobs to Merseyside?

Mr. Clark: I do not accept that the picture is as dark as the hon. Gentleman paints it. Vacancies notified to the jobcentres are up by 32 per cent., placings are up by 16 per cent. over the last year, and there are over 10,000 young people on the young workers scheme. As to his allegation that the mode B1 places have been cut, there is a place on the youth training scheme for every person who wishes to take one up.

Mr. Porter: Does my hon. Friend agree that, while these figures are rather bad, the situation is not helped by the activities of the majority of the Labour members of Liverpool city council, who have behaved like raving lunatics in relation to finance? Does he agree that if they would only come to their senses the prospect for employment in Liverpool, and on Merseyside, would be very much better?

Mr. Clark: I entirely agree with my hon. Friend. It is not for me to digress on the internal ramifications of the

Labour party and the various allegiances that it adopts, but it will have noted that its own leader has refused to align himself with the policies of the Labour majority on the city council.

Mr. Alton: Does the Minister not accept that, with one in five of the local population out of work, there are no grounds for complacency? Given that the large majority of the unemployed are construction workers, does the Minister not think that it is time that the Department, with other Government Departments, looked at the possibility of a major capital works scheme, such as a tidal barrage across the Mersey, to create construction workers' jobs?

Mr. Clark: The hon. Gentleman asks for a major capital works scheme. He should recognise that the city of Liverpool benefits from the public purse in the following sectors. It has special development area status, it has a development corporation, it has an inner city partnership, it has an enterprise zone, and it has recently been chosen as an experimental freeport location. He may well feel that other and neighbouring areas may be asking themselves why they, too, cannot benefit.

Mr. Nicholls: Surely if these figures are testimony to anything, they are testimony to the fact that, since 1973 at least, that particular authority has been under the control of the Labour party, as recently, or of the Liberal party?

Mr. Clark: Of course it is a tragic proof that this great city, once a pillar of the nation's commercial strength, should have been reduced to its present plight by the doctrinaire idiocies of the Labour party majority on the city council.

Mr. Sheerman: Is not the Minister yet again, by his answer to my hon. Friend, attempting to mislead the House? He has mentioned the youth training scheme. Is not the figure for youth unemployment only 1 per cent. different from what it was a year ago? Does he accept that young people are no longer being attracted to the youth training scheme, either in Liverpool or nationally, and that there are 370,000 young unemployed who are not joining the youth training scheme? There is something wrong with the scheme if the Government have to give such an answer to the House.

Mr. Clark: I do not accept that view. The scheme is an excellent one and would benefit from the support of influential people such as the hon. Member, councillors and trade union leaders, who should draw the attention of young people and their parents to its benefits.

Youth Training Scheme

Mr. Colvin: asked the Secretary of State for Employment if he is now satisfied with the safety provisions for those on the youth training scheme.

The Minister of State, Department of Employment (Mr. Peter Morrison): Yes, Sir. However, I can assure my hon. Friend that the safety provisions of the scheme are kept under review in order to ensure their continued appropriateness and effectiveness.

Mr. Colvin: Is my hon. Friend satisfied that the Health and Safety at Work etc. Act 1974 adequately protects trainees, particularly in relation to inspections and inquiries? What arrangements is he making to ensure that the provisions of the Act are adequately checked and


updated, particularly in the case of the youth training scheme, which is now becoming a permanent and valuable part of training provision for our school leavers?

Mr. Morrison: I agree with the latter part of my hon. Friend's supplementary question. In January this year my hon. Friend the Minister of State tabled the Health and Safety at Work (Youth Training Scheme) Regulations, which put all youth trainees on the same basis as employees.

Mr. James Hamilton: Is the Minister aware that my hon. Friend the Member for Monklands, West (Mr. Clarke) has raised on the Floor of the House the case of two lads who had fatal accidents? One of the employers was fined heavily, which made it crystal clear that he was to blame. In the other case the sheriff stated that in his view sufficient safety regulations had not been in operation. Is it not time that the Minister took action before there are more fatal accidents?

Mr. Morrison: The hon. Gentleman and I will agree that one accident—certainly one fatal accident—is one too many. However, I can assure the hon. Gentleman, as I have assured my hon. Friend, that, with the further tabling of regulations in January this year, everything possible is being done both by the Health and Safety Executive and by the Manpower Services Commission.
If any hon. Member in any part of the House has any constuctive thought to put to me on the matter, I am always prepared to listen. The health and safety of the trainees is of paramount importance.

Mr. Needham: No scheme is perfect, but does my hon. Friend agree that the youth training scheme is excellent and that it is high time it had the full support of all right hon. and hon. Members on the Opposition Benches?
If the scheme suffers at all, it is by its link with the youth opportunities programme, for which the Labour Government were responsible.

Mr. Morrison: Yes, I agree with my hon. Friend. It is regrettable that Labour Members do not back the scheme, as many of their supporters do. I also agree that the YTS is a training scheme, not a special employment measure like the youth opportunities programme. If only Labour Members talked to the trainees, they would be impressed by their enthusiasm for the training that they receive.

Mr. Martin: Is the Minister aware of a recent press report to the effect that the Government are to pay retired civil servants £90 a day to advise on safety on the youth training scheme. If the Government are serious about the safety of the young people on the scheme, surely they should not use retired people in that way, particularly as nearly 4 million people are unemployed?

Mr. Morrison: I am not aware of the press report or press release to which the hon. Gentleman refers. Nine specialist advisers have been appointed to the nine regions to consider health and safety—matters about which the hon. Gentleman and I are both concerned.

Jobcentres (Advertising)

Mr. Haynes: asked the Secretary of State for Employment if he is satisfied that jobcentres have ceased advertising jobs at illegally low rates of pay.

The Minister of State, Department of Employment (Mr. John Selwyn Gummer): I am satisfied that jobcentres take all reasonable steps to avoid advertising jobs at levels of pay below wages council minimum rates.

Mr. Haynes: How can the Minister be so confident that jobcentres are not advertising jobs at illegally low rates of pay? He knows very well that the Government deliberately stopped the document, "Times, Rates of Wages and Hours of Work" which informs people of wages councils' rates. Why does the Minister not answer that question instead of the one that he answered just now?

Mr. Gummer: I did not answer that question because it was not the question that was tabled. The hon. Gentleman asks why I am confident. The reason is that the long-standing instructions to our staffs in jobcentres state quite clearly that if they are in any doubt whether a vacancy offers at least the legal minimum rate they should seek advice from a wages inspector. The hon. Gentleman knows perfectly well that the range of wages levels that wages councils give is substantial and that the right person from whom to get that information is the wages inspector.

Mr. Thurnham: Does my hon. Friend consider that wages councils do anything to help the unemployed?

Mr. Gummer: My hon. Friend will accept that the Government are carefully examining wages councils, as we believe that, if it is shown that wages councils reduce opportunities for people, the Government ought to take action. We are seeing whether that is so.

Mr. Evans: Does the Minister agree that the best way to stop some sweatshop employers paying their employees illegally low rates of pay is substantially to increase the number of wages inspectors? Does he agree that the Government should instruct them to prosecute every case of wilful neglect of the law that they discover?

Mr. Gummer: The fact remains that the work of the wages councils inspectorate, the number of cases followed up and general activity on this front are similar to that which obtained under the Labour Government. If what they were doing was insufficient, why on earth is the hon. Gentleman complaining about us now?

Labour Statistics

Mr. Janner: asked the Secretary of State for Employment what steps he is taking to reduce the number of those registered as unemployed for over 52 weeks in the city of Leicester.

Mr. Alan Clark: As the hon. and learned Gentleman knows, the best way we can help the long-term unemployed is by establishing the economic conditions in which industries can become more competitive and start to expand. In the meantime, help is available through the community programme, which has made excellent progress towards the objective of providing up to 130,000 temporary jobs for the long-term unemployed.

Mr. Janner: Directing myself to the question, will the Minister tell the House how many people in the city of Leicester, which was once so prosperous, have now been unemployed for more than 12 months? Does he accept that one awful by-product of this increasing and lengthy unemployment is the growth of sweatshop labour, which is a cause for much worry to all of us in the city of Leicester?

Mr. Clark: The hon. and learned Gentleman did not table a precise request for the number of unemployed during that period of time, but I shall ensure that he gets the figure. He should recognise that unemployment in Leicester is below the national average and below the average for the east midlands. Indeed, unfilled vacancies at jobcentres have increased by 37 per cent. in the past year.

Skillcentres

Mr. Ray Powell: asked the Secretary of State for Employment how many people are currently attending skillcentres; and how this compares with the position 12 months previously.

Mr. Peter Morrison: There were 11,484 people in training in skillcentres on 30 January 1984, the latest date for which figures are available. At 31 January 1983 the number in training in these establishments was 13,131.

Mr. Powell: Is the Minister aware that that drop of some 2,000 is appalling? Is he further aware that apprenticeship schemes throughout the country have been cut by employers and that that will create a burden? If we have an upturn in the economy as the Government predict, where shall we find the trained personnel that we need? Is it not nonsense to talk about closing job training centres when we should be putting more money into increasing them and the number of available jobs?

Mr. Morrison: I am not aware that the drop is appalling, because the training division of the Manpower Services Commission is spending its money more sensibly. Is the hon. Gentleman aware that, as a result of the way in which it purchases its training, 2 per cent. more people will be trained in 1984–85 than in the previous year? That seems to me to be a more effective way in which to achieve our aims.

Mr. Ashby: What is the under-used capacity of the skillcentres? What steps is my hon. Friend taking to reduce it?

Mr. Morrison: My right hon. Friend the Secretary of State and I have been negotiating with the Manpower Services Commission on that matter. In the year ahead the gap between the amount of purchasing and the cost of running the skillcentre training agency will be about £24 million. My right hon. Friend has agreed with the MSC that that gap should be closed to zero in the year beginning 1986.

Ms. Richardson: The Minister will be aware that only 3 per cent. of trainees at skillcentres are women. Effectively, the Government are denying women the right to training opportunities on an equal basis with men while the Government do not provide, for example, nurseries at skillcentres, child care allowances and, most important, more flexible training hours. It is difficult for women with children to take the opportunities that should be on offer while rigidity exists in the skillcentres.

Mr. Morrison: The hon. Lady puts her finger exactly on the point. My right hon. Friend the Secretary of State has said in the White Paper that we want more flexible and more relevant training. That might mean the training is not provided in the skillcentres. Whether the training occurs there or elsewhere is relevant only to the extent that the training is of the type that trainees want.

Labour Statistics

Mr. Lofthouse: asked the Secretary of Slate for Employment what is the latest number of people unemployed; and how many of them have been unemployed for more than 12 months.

The Secretary of State for Employment (Mr. Tom King): On 9 February the total number of unemployed claimants in the United Kingdom was 3,186,000. The number unemployed for over 52 weeks on 12 January was 1,188,000.

Mr. Lofthouse: Is the Secretary of State aware that, in the next financial year, the Government and the National Coal Board are about to add 20,000 miners to those figures, including 1,000 miners in my constituency? Bearing in mind that those miners will be in their early 50s, has his Department any plans to encourage future employment in the mining areas? Do the Government plan to commit young miners to an industrial desert?

Mr. King: The best hope for the unemployed and those facing job losses because of pit closures is a general improvement in the economy. I am encouraged at the progress being made. I am delighted that my right hon. Friend the Chancellor has decided to abolish the tax on jobs that was introduced by the last Labour Government. I am delighted that the confidence flowing from my right hon. Friend's Budget has resulted in an immediate reduction in interest rates. Both those measures will make a substantial contribution towards helping the employment scene.

Sir Kenneth Lewis: Does my right hon. Friend agree that those over 55 who are now long-term unemployed are those least likely to obtain jobs again? Is there not, therefore, a case for either a higher form of unemployment benefit or some bridging income that will take those people to the retirement pension level and thus look after that group?

Mr. King: Our first ambition is to provide the best possible opportunities for people to obtain jobs. Although the employment position differs in different parts of the country, it is encouraging that this year, compared with last year, there has been a significant increase in job placements. I do not necessarily take my hon. Friend's approach to this matter. Long-term unemployment benefit is a matter for my right hon. Friend the Chancellor, but I take note of my hon. Friend's point.

Mr. Flannery: Is it not the height of hypocrisy for the Government to have been prating for the past fortnight about allowing miners who wish to go to work to do so when all hon. Members know that the Government are closing pits at a rate that will put scores of thousands out of work? When the Government are putting millions of working people out of work, why do they not realise that their policy is causing unemployment? Why do the Government not begin reflation of the economy and get the working people back to work?

Mr. King: I do not regard the hon. Gentleman as an authority on hypocrisy when he chooses to make that sort of comment and when he supported a Government who closed pits at twice the rate of the present Government and who invested half as much as we are investing in new and more productive capacity.

Mr. McQuarrie: I accept what my right hon. Friend says about the long-term effect on most industries of the removal of the national insurance surcharge. Does he agree, however, that, particularly in rural areas, those over 55 and the young are unable to obtain work because of the scarcity of jobs in those areas? Will he give thought to finding a solution to this severe problem?

Mr. King: The whole House—indeed, anybody who has studied these problems—recognises the real difficulties faced by the more elderly in the search for work. I cannot go further than my comments today, although I hear what my hon. Friend says.

Mr. John Smith: Is the Secretary of State not ashamed of the fact that in five years of Conservative rule the number of long-term unemployed has steadily climbed to the scandalous total of 1,188,000? As the Government appear to have no special measures in mind to alleviate their condition, is it not long overdue that they should be given the elementary social justice of long-term supplementary benefit?

Mr. King: I note that the right hon. and learned Gentleman was a member of a Cabinet which succeeded in doubling unemployment and which had no solution to that problem. I note, too, that I am a representative of a Government who are spending substantially greater sums in trying to solve these problems with a range of special employment measures. The problems are, of course, extremely difficult. The first requirement in our handling of expenditure is to ensure that we give the best chance of employment to people, which means continuing to pursue the economic policies that were amply reinforced by my right hon. Friend in his Budget.

Mr. Ron Davies: asked the Secretary of State for Employment how many people over 50 years of age his Department estimates to be unemployed at the latest available date.

Mr. Alan Clark: The number of unemployed claimants aged 50 years and over in the United Kingdom on 12 January, the latest available, was 574,692.

Mr. Davies: Is the Minister aware that in these days of Tory Britain, those 500,000 are effectively consigned to the scrapheap? If there is logic in applying the long-term rate of supplementary benefit to people over 60 who have no prospect of work, why is there not logic in the argument that long-term supplementary benefit should be extended to the over-50s who have no prospect of work?

Mr. Clark: The hon. Gentleman draws attention to a particularly difficult sector of the labour market where there will be many individual cases of frustration and disappointment. We hope that employers will recognise the value of the experience and skills of people in this age group and will alter their recruitment practices to take advantage of them. When the hon. Gentleman says that logic would indicate a certain course, he must also allow that resources oblige another one.

Mr. Bill Walker: Is my hon. Friend aware that among those over 50 who are unemployed are a number in my constituency who have been unemployed since the mills closed down under a Labour Government? Those people have the opportunity of finding jobs only in the service sector and tourism, and recent measures taken by the Government have done something for that sector.

Mr. Clark: I am obliged to my hon. Friend for drawing the attention of the House to that fact. It is in the service sector that the new jobs are expected to come fastest.

Mr. Penhaligon: How many more people in this category are in effect unemployed because they have some savings and are, therefore, disqualified from receiving supplementary benefit? Is it the Government's intention that those in this category shall eventually be reduced to claiming supplementary benefit as they see the efforts of their lifetime's work gradually being eroded?

Mr. Clark: If it is possible to ascertain how many potential claimants there are in that category, I shall ensure that the hon. Gentleman has the information he needs.

Mr. Lord: How much in redundancy payment is likely to be obtained by somebody aged 50 after a lifetime spent in the coal industry?

Mr. Clark: Approximately £30,000.

Mr. Evans: Does the Minister have any idea of the despair of many of the 574,692 aged over 50 who have become unemployed under the Tories and who feel that they have no chance of ever getting another job? Will the Government formulate policies either to get this group of people back into employment or to give them a decent standard of living which will allow them to remain unemployed until they qualify for retirement pension?

Mr. Clark: As I have told hon. Members, there are cases of individual distress and frustration in that sector of the labour market. The hon. Gentleman asks what the Government will do. Resources limit the extension of supplementary benefit along the lines that many would like. It would cost £480 million to extend it across the board, and £220 million to extend it just to those with dependent children.

Mr. Teddy Taylor: asked the Secretary of State for Employment what are the current unemployment percentages in the United Kingdom and in each current or former member state of the European Free Trade Association; and what were the corresponding figures in 1972.

Mr. Gummer: For the United Kingdom, the latest figure on an OECD standardised basis is 13·4 per cent. in January, compared with 4·3 per cent. in 1972. For the other countries, the latest available figures range from 16·7 per cent. for the Republic of Ireland in November last year to 0·8 per cent. for Iceland for 1982, but as there are a number of figures from differing sources I will with permission publish the complete information in the Official Report.

Mr. Taylor: Do not the average figures show that we have not done a service to our working population by withdrawing from that outward-looking and non-bureaucratic organisation, which co-operates fully with the Common Market but does not get involved in its bureaucratic and interventionist nonsenses? Might it not provide an answer to our current problems in Brussels if we reapplied to join that excellent organisation?

Mr. Gummer: The views of my hon. Friend and myself are well known. I believe that we have gained considerably in jobs through membership of the European Community. In this country 2½ million jobs depend on our exports to the rest of Europe, and many of them would be lost if ever we left the Community.

Mr. Wilson: As the United Kingdom's economy has been declining steadily for some 30 years, going back before our entry into the EEC, does not the blame for our high unemployment rest on the shoulders of successive Labour and Tory Governments, who have proved incompetent to deal with the economy?

Mr. Gummer: The hon. Gentleman is right to say that a major way of getting ourselves out of our economic problems is through our own efforts, which is why the Government's policies are most likely to produce the economic rejuvenation that we look for.

Following is the information:


Unemployment rates compared with 1972



Latest date
Annual average 1972


United Kingdom*
13·4 (January)
4·3


Republic of Ireland║
16·7 (February)
6·0


Denmark†
10·6 (November)
1·7


Portugal‡
7·6 (1982)
2·5


Finland*
6·2 (December)
2·5


Austria*
4·2 (September)
1·2


Sweden*
3·2 (January)
2·7


Norway*
2·7 (November)
1·7


Switzerland
1·0 (December)
0·1


Iceland║
0·8 (1982)
0·5


* OECD standardised seasonally adjusted unemployment rates, expressing unemployment as a percentage of the total labour force.


Source: OECD.


† Seasonally adjusted registered unemployment as percentage of total labour force. Source: OECD "Main Economic Indicators"—supplemented by labour attache reports.


‡ Estimates from labour force survey. Source: "OECD Economic Outlook".


║ Registered unemployed—basis of rate calculation not known. Source: "ILO Year Book of Labour Statistics".


¶ Seasonally adjusted registered unemployment as percentage of civilian working population. Source: OECD "Main Economic Indicators".


• Registered unemployed as percentage of working population. Source: labour attache report and "ILO Year Book of Labour Statistics".

Unit Labour Costs

Mr. Rathbone: asked the Secretary of State for Employment if he will provide the latest information on comparative unit labour costs in Great Britain and in the European Community as a whole.

Mr. Tom King: Information for the European Community as a whole is not available. The annual change in unit wage and salary costs in the third quarter of 1983 was up 2 per cent. in United Kingdom manufacturing, minus 3 per cent. in West German mining and manufacturing and plus 12 per cent. in French engineering.

Mr. Rathbone: Does my right hon. Friend agree that that is a most unhealthy base for the continued upturn in the economy projected by the Government, which we all want?

Mr. King: I hope that the House took careful note of those figures. We take some encouragement from the reduced rate of inflation, but should heed the warning that our unit costs are rising. Although the question deals specifically with Europe, it is worth noting that unit costs are falling in Germany and the United States, and are static

in Japan, which shows that we cannot afford to relax, and how important it is to ensure that we keep our prices competitive.

Mr. Litherland: What consolation is the Minister's answer to the work force of the Phillips Rubber Company in Manchester, which has been sacked and locked out merely because its crime was to ask for an increase on £46 a week for a 40-hour week?

Mr. Speaker: Order. The hon. Gentleman's supplementary question has nothing to do with question 9.

Mr. Yeo: Does not the significance of my hon. Friend's answer lie in the French figures, which show the cost of the disastrous Socialist policies pursued there? Does he accept that if we were to take account of the Opposition's suggestions and criticisms made after last week's Budget, Britain, too, might go down that route?

Mr. King: The idea that Socialist policies offer salvation to France was not reflected at the Council of Ministers meeting, when the French Minister had to face adverse publicity following the announcement that France would have to lose 500,000 jobs in steel, cars and shipbuilding because of its problems. I am surprised that hon. Members argue about this, because we shall not get export orders, or the jobs that go with them unless we stay competitive.

Mr. Maclennan: To what does the Secretary of State attribute the relative deterioration in our competitiveness under his Government, and what does he propose to do about it?

Mr. King: At present our increase in productivity is about 6 per cent., which is similar to that of Germany, but our wage increases in the past year have been substantially in excess of those in Germany, and greater than our increase in productivity.

Mr. John Smith: Given what the Chancellor said last night and what the Secretary of State has said today, would it not be fair to describe Government policy as consisting of the following proposition: that profits should be as high as possible and wages should be as low as possible?

Mr. King: I wonder how the right hon. and learned Gentleman, who is always calling for investment, thinks investment comes without profits. That is important to this country's recovery. It is no coincidence that we are now starting to see more jobs in this country—[HON. MEMBERS: "Where?"] I know that hon. Members get upset at good news, but if they care to study the Employment Gazette they will see that the latest figures show that more people are at work and that we are creating more jobs. It is no coincidence that that is happening at a time when the profit performance of industry is improving.

Unemployed Persons (Assistance)

Mr. Andrew F. Bennett: asked the Secretary of State for Employment what retraining programmes and official assistance is available to unemployed people between 40 and 50 years of age.

Mr. Peter Morrison: The Government support the retraining of unemployed people, including those between 40 and 50 years of age, through the training opportunities scheme. Trainees are paid a weekly allowance and help may also be given with travelling expenses and lodging costs.

Mr. Bennett: Does the Minister appreciate how demoralising it is when people in that age group are out of work for 12 months or more and how difficult it is for them to get training opportunities? Does he accept that one of the best opportunities was provided by the skillcentres? Why are the Government under-using the skillcentres and not encouraging people in that age group to go to them, where they may receive sympathetic treatment, which helps them to regain their self-confidence and become more able to contribute as much as others to the labour market?

Mr. Morrison: I assure the hon. Gentleman that in retraining there is no bar on people in the 40 to 50-year-old age bracket. I entirely accept his point that the transition from an erstwhile skill to a new skill is important. With regard to the skillcentres, the hon. Gentleman must understand that we are getting value for money, which means that more money is available in the long term to train more people.

Mr. Hickmet: May I remind my hon. Friend that in Scunthorpe, in my constituency, 11,000 men have been made redundant since 1981, and that the incentive for the new industries that we wish to come into the constituency depends upon specific training programmes under the Manpower Services Commission being marketed to them? I ask my hon. Friend to consider the possibility of a specific training programme being set up in Scunthorpe so that the town can be made more attractive to certain industries.

Mr. Morrison: I appreciate what my hon. Friend says. I assure him that the aim behind the new adult training strategy that my right hon. Friend the Secretary of State has agreed with the MSC is for specific training relevant to the future.

Mr. Campbell-Savours: Why did the Government cut the community programme, with its retraining element? Surely that was a senseless and irresponsible act. Is the Minister aware that in the county of Cumbria our places on the programme have been reduced from 1,700 to 900 over a period of only 18 months, with a loss of 700 jobs? Is it not utterly irresponsible for the Government to put people on the dole in this way? Will the Secretary of State restore the figures for Cumbria, because we want our community programme places back?

Mr. Morrison: The hon. Gentleman will appreciate that after the community enterprise programme, with 30,000 places, the community programme, with 130,000 places, was introduced. That is no cut—it is a fourfold-plus increase.

Mr. Greenway: Will my hon. Friend consider changing his policy and fund 40 to 50-year-olds on courses at skillcentres 100 per cent.? That would help the Perivale skillcentre, for example, very much.

Mr. Morrison: My hon. Friend will be aware that every trainee at a skillcentre receives an allowance, so all the trainees are funded. Of course, the training is given to them free of charge.

Mr. Sheerman: Will the Minister offer some hope to the large number of people between the ages of 40 to 50? Is he aware that there is potential in the Open University to experiment with courses for the unemployed and for the long-term unemployed? Is he further aware that the Open

Tech is in danger of having to invent the wheel again because there is no proper communication between the Open University, with its resources, and the Open Tech? Does he realise that money may be wasted by the way in which these courses are being rapidly expanded to help retrain that age group?

Mr. Morrison: The hon. Gentleman does not quite understand what the Government are doing. As a result of the adult training strategy the numbers who are receiving training in the 40 to 50 year age group will be substantially increased. The Open Tech programme was launched by my right hon. Friend the Member for Waveney (Mr. Prior) when he was Secretary of State for Employment. I should have thought that the hon. Gentleman would commend that initiative, not deride it.

Youth Training Scheme (Hospitals)

Sir William van Straubenzee: asked the Secretary of State for Employment what representations he has received as to the effect of the youth training scheme on hospital wards already training nurses and ancillary staff.

Mr. Peter Morrison: I have received no direct representations on that subject.

Sir William van Straubenzee: I wish to make it quite clear that my question is prefaced by warm support for the youth training scheme. Will my hon. Friend keep a monitoring eye in case ward sisters, especially those who already have a rightfully heavy programme dealing with trainee nurses, become unduly overburdened by having in addition YTS trainees at the same time?

Mr. Morrison: I am grateful to my hon. Friend for his warm support for the YTS. I assure him that the director of the Manpower Services Commission was in touch with the chief executive of the English National Board for Nursing Midwifery and Health Visiting about schemes in hospitals. My hon. Friend's point was also made by the director of the MSC.

Mr. Ashton: Would it not be better to get the 4 million people back to work and have 4 million more national health stamps coming in every week, as we used to have, which could be used to create permanent jobs? Would that not be a better system?

Mr. Morrison: The hon. Gentleman presumably understands that a job exists only when a product or a service is produced of a quality such that both he and I would wish to buy it. That is the simple answer.

Mr. Wrigglesworth: If the Minister is tempted by the Secretary of State to cut back in the sphere that his hon. Friend the Member for Wokingham has just mentioned, will he restrain any further cutbacks in training in the mode B1 system of the YTS to ensure that we do not establish a two-tier system, which would be a great disadvantage to the scheme?

Mr. Morrison: The hon. Gentleman will be aware that at present on the mode B1 system there are 55,000 young trainees and 90,000 approved places. Next year we plan to have up to 70,000 trainees. Each approved unfilled place costs £2,000 although nobody is trained.

Government Employees (Collective Agreements)

Mr. Dalyell: asked the Secretary of State for Employment if he will list the European Economic


Community countries where there are restrictions as a result of collective agreements on the freedom of some or all Government employees to take industrial action; and if he will indicate the groups of employees and the restrictions in each case, respectively.

Mr. Tom King: Restrictions on the freedom to take industrial action of some or all Government employees in certain EEC countries arise principally as a result of legal prohibition. However, some Government employees in certain EEC countries are covered by legally enforceable collective agreements, which create an obligation not to take industrial action during their currency and that limits the freedom to take industrial action of those concerned.

Mr. Dalyell: Why deny Government communications headquarters' employees a no-strike agreement?

Mr. King: The matter was fully debated in the House. I set out the problems that exist and explained why the trade unions' proposals, which were genuine, fell short of the Government's requirements. The Government were supported by the Select Committee, which made it clear that it was the Government's overriding responsibility to ensure that their objectives were achieved.

Mr. Robert Atkins: Is my right hon. Friend aware that there is a restrictive agreement with a number of unions in the Health Service in Lancashire and many other counties to prevent the Association of Professional Ambulance Personnel, which represents a majority of trade union members in Lancashire, from participating in industrial negotiations with the health authority? Does the Minister agree that that is disgraceful?

Mr. Speaker: I must draw the hon. Member's attention to the fact that the main question relates to Government employees.

Mr. John Smith: With reference to GCHQ, which was the basis of my hon. Friend's question, can the Secretary of State tell the House why the Government rejected the option of a ballot at GCHQ to see whether the employees wanted to join the union?

Mr. King: The Government have a clear responsibility for national security. That is recognised in domestic legislation and in International Labour Organisation conventions. It was the Government's judgment that it was in the interests of national security and that the primary function of those agencies was such that they should operate as the Government proposed.

Community Programme

Mr. Kenneth Carlisle: asked the Secretary of State for Employment how many people are employed in the community programme at the latest available date.

Mr. Alan Clark: On 29 February, the latest date for which figures are available, there were almost 112,000 people employed on the community programme.

Mr. Carlisle: Does my hon. Friend agree that this is an excellent programme for the long-term unemployed and for the community? Does he understand that in Lincolnshire there is great anxiety because the number of places on the scheme is being reduced by one third? It is wrong and it is bad management to ask anyone to reduce a programme at short notice by that amount. Will he undertake to restore the numbers on the scheme to their original level?

Mr. Clark: I am grateful to my hon. Friend for the appreciative remarks that he has made about the scheme. I know that he played a significant part in getting it off to a successful early start in Lincolnshire. He must accept that those who got off to an early start received more than their original allocation. Now that the scheme has proved successful throughout the United Kingdom it is necessary to adjust the allocation to its original figure in response to the dictates of fairness. There are Government constraints, and in the past three months the House of Commons has approved £25 million for the scheme. I hope that my hon. Friend will accept that I cannot give an undertaking to increase that allocation in the near future.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Colvin: asked the Prime Minister if she will list her official engagements for Tuesday 20 March.

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): I have been asked to reply.
My right hon. Friend is attending a meeting of the European Council in Brussels.

Mr. Colvin: In asking my right hon. Friend to convey to the Prime Minister our best wishes for success, may I also ask whether he is aware that on the home front, as a result of the Budget, 100,000 fewer pensioner households will be paying income tax than was the case under Labour? Does that not show that, as well as being a Budget for business and jobs, it is also a Budget for pensioners, and that we can get the priorities right, even if Opposition Members fail to recognise that?

Mr. Biffen: I shall gladly convey best wishes to my right hon. Friend in her task at the European Council meeting. The House will be aware that she will be reporting on that tomorrow. My hon. Friend is right to draw attention to the pensioner households that will be taken out of tax as a result of my right hon. Friend's Budget, and further to observe that it is an extraordinarily well-judged and well-balanced Budget in what it offers and in terms of industry and social judgment.

Mr. Kinnock: On the subject of the treatment of pensioners, is the right hon. Gentleman aware that as a consequence of the Health and Social Security Bill pensioners will have to meet huge increases in the cost of their spectacles? Does he also understand that the greater their need to change their spectacles, the higher the cost will be? How can he possibly defend that?

Mr. Biffen: The right hon. Gentleman will be aware that arrangements are made for the provision of National Health spectacles for pensioners. For the totality of pensioners, I have no doubt that the lifetime of this Government and Parliament will show an increase in pensioner living standards compared with what happened under the Labour Government.

Mr. Kinnock: I am sorry that the right hon. Gentleman does not appear to be aware that pensioners no longer qualify for National Health Service spectacles. The only people who do qualify are the very poor and children under the age of 16. Is he aware that pensioners will now have to pay £70 to £80 for spectacles which they have been able


to get on the National Health Service for £30? If he agrees with my view of that, and I suspect that he does, why does he not have changes made on Report?

Mr. Biffen: I say at once to the right hon. Gentleman that my observations about pensioners' living standards took account of the recent changes in the legislation governing spectacles. It is a very short-term piece of politics to engage in scare talk of £80 for a pair of spectacles. It would be nice to have the debate carried further on Report, and we shall welcome that.

Mr. Porter: Will my right hon. Friend take time today to indicate to the Government of the Republic of Ireland the gratitude of Her Majesty's Government that McGlinchey was so rapidly extradited to Northern Ireland? Does this not indicate——

Mr. Speaker: Order. I must warn the hon. Gentleman and the House that this matter is sub judice.

Mr. Blair: asked the Prime Minister if she will list her official engagements for Tuesday 20 March.

Mr. Biffen: I have been asked to reply.
I refer the hon. Gentleman to the reply I gave some moments ago.

Mr. Blair: Regardless of the merits, does the right hon. Gentleman not agree that the blanket setting-up of road blocks to prevent the free movement of citizens is a serious invasion of civil liberty and has no basis whatever in law? Prior to the introduction of this arbitrary emergency power, what consultations and discussions took place between the Government and chief constables?

Mr. Biffen: As to the first point, which I understand is the subject of legal action, I cannot comment upon any individual case, but there is no doubt about the general legal situation. If a constable reasonably concludes that persons are travelling for the purpose of taking part in a picket in circumstances where there is likely to be a breach of the peace, he has the common law power to call upon them not to continue their journey.

Mrs. Jill Knight: May I draw the attention of my right hon. Friend to the fact that my right hon. and learned Friend the Minister for Health, during the Committee Stage of the Bill dealing with charges for spectacles, has noted that a number of elderly people who will face extreme extra charges if they are not allowed to have National Health Service spectacles will be the subject of some consideration? Can he back up the suggestion of his right hon. and learned Friend with an assurance to the House that people will not be penalised if their sight is very bad?

Mr. Biffen: I am grateful to my hon. Friend for her comment. I am certain that in this matter, as on social services issues generally, my right hon. Friend the Secretary of State for Social Services needs no instruction from the Opposition Benches.

Mr. Benn: Can the Leader of the House tell the House by what statutory authority police have occupied the Speedwell rooms in Chesterfield and the Ashgate hospital? Will he give a categorical assurance that the Government have not put the armed forces on to alert?

Mr. Biffen: I can give the right hon. Gentleman an assurance that the armed forces have not been put on alert.

Mr. Maxwell-Hyslop: In the context of the Prime Minister negotiating with other Heads of Government in the EEC, would it not be timely for her to remind the other Heads of Government that the reason for the unanimity rule is that the EEC should not destroy itself by taking decisions that are unacceptable to any member State?

Mr. Biffen: I agree with that view.

Mr. Andrew MacKay: asked the Prime Minister if she will list her official engagements for 20 March.

Mr. Biffen: I have been asked to reply.
I refer my hon. Friend to the reply I gave some moments ago.

Mr. MacKay: Is my right hon. Friend aware that many British companies are now experiencing considerable difficulties in securing orders in the Gulf because the Governments in that area—[Interruption.]—rightly resent the irresponsible muck-raking carried on in this House by Labour Members who have tried, unsuccessfully, to damage the Prime Minister's reputation? Do they realise how much harm they are doing to British industry? Doe they realise how many jobs are at risk because of their action?

Mr. Biffen: I have no evidence of contracts lost, but I am sure my hon. Friend is right to say that the matters to which he referred could well make life that much more difficult for British exporters in the area. One thing is certain: what makes for grubby politics is rarely good for this country.

Mr. Haynes: Is the Leader of the House aware that people outside the mining community, ordinary folk, are concerned about the over-reaction of the police in the miners' dispute, which clearly shows that the Government are taking the course of establishing a police state? Will the right hon. Gentleman tell the House and the public outside whether they are planning to move to a one-party state?

Mr. Biffen: There is rarely an industrial dispute that cannot be made worse by the rhetoric of politicians, but to talk about a police state or the Government trying to connive at a one-party state is a straight absurdity. In my opinion, the police have performed a most important role in enabling those who wish to work to exercise that right.

Mr. Robert Atkins: asked the Prime Minister if she will list her official engagements for 20 March.

Mr. Biffen: I have been asked to reply.
I refer my hon. Friend to the reply I gave some moments ago.

Mr. Atkins: Does not my right hon. Friend applaud the speed with which the Irish Garda recenty accomplished the capture of Mr. Dominic McGlinchey? Does he not also applaud the increasing co-operation between security forces on both sides of the border? Will he pay tribute to the Taoiseach for standing up to the extremists who are trying to upset him, particularly in the United States of America, since that must bode well for future Anglo-Irish relations?

Mr. Biffen: I join my hon. Friend in congratulating the Garda on securing the captivity of Mr. McGlinchey. I also agree with my hon. Friend on the other points that he raised and in hoping that this will augur continued and improving relations between this country and the Irish Republic.

Mr. Fatchett: Is the Leader of the House not concerned that only 179 Conservative Members have signed early-day motion 585 about the Prime Minister? Does the Leader of the House feel that that low number can be accounted for by the fact that many Conservative Members agree with the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who feels that the Prime Minister should make a statement to the House?

Mr. Biffen: I am sure that connoisseurs of early-day motions will be more than satisfied by the time the final number has been tallied.

Mr. Dobson: asked the Prime Minister if she will list her official engagements for Tuesday 20 March.

Mr. Biffen: I have been asked to reply.
I refer the hon. Gentleman to the reply I gave some moments ago.

Mr. Dobson: Will the Leader of the House say whether he believes the chairman of the Conservative party, who said that the "Panorama" programme on Right-wing infiltration of the Tory party was incorrect, or whether he believes the chairman of the Young Conservatives, who said that it was correct?

Mr. Biffen: The "Panorama" programme is itself now the subject of legal representations and I shall very properly curtail my comments on that account. Let me say at once, however, that it would not need the proposition of a comparison between my hon. Friend the chairman of the Conservative party and the chairman of the Young Conservatives for me to say without question that my hon. Friend has conducted his chairmanship and investigation of this issue with total integrity. The fact that the matter is now being considered for reference to the Broadcasting Complaints Commission is a sign of the very serious concern felt about it.

Sir Anthony Grant: Is my right hon. Friend aware that in answer to a recent question of mine the Prime Minister stated that more than £1,000 million a year of public money is pumped into Merseyside? Are the taxpayers getting value for their money, and would it not be a good thing if the Liverpool council stopped whining and started obeying the law?

Mr. Biffen: The very statistic that my hon. Friend quotes is a reason why there would be very little public tolerance of a revolt by the Militant Tendency councillors on the Liverpool council.

Royal Dockyards

Mr. Gordon Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent attention, namely,
the plan now being considered by the Secretary of State for Defence to hand over to private commercial contractors responsibility for the royal dockyards, including the responsibility for refitting Britain's strategic nuclear deterrent, Polaris.
The matter is specific because a report has been prepared by the personal adviser to the Secretary of State for Defence which has profound and disturbing consequences for the two great naval dockyards at Plymouth and at Rosyth, which is in my constituency, and for the 25,000 loyal civil servants who work there.
The matter is urgent because the report to which I refer has already been accepted for further study by the Admiralty Board and because negotiations about the privatisation of the dockyards are already taking place with commercial contractors, the plans evidently to be finalised before 31 March.
The report has been commissioned, received and apparently acted upon without the knowlege of the House. The matter is of the utmost public importance because in the report no consideration has been given to the consequences for national security of changes that would place the responsibility for our independent nuclear deterrent, Polaris, in commercial and perhaps even foreign hands. Only two lines of the 3,000-word document are concerned with national security and it is clear that the report as a whole has simply subordinated all questions of national security to those of commercial advantage. Our nuclear deterrent is being treated by the Government as if it were a fast-food franchise.
Perhaps the most unsavoury aspect of this disturbing case, and the reason why urgent consideration of it is necessary, is that the author of the recommendations, who is personal adviser to the Secretary of State for Defence, is not only vice-chairman of the Defence Manufacturers

Association but chairman of a number of arms companies with financial links in Egypt, West Germany, America and Singapore and chairman of a holding company which, according to the latest Ministry of Defence statistics, benefits by at least £25 million a year from British defence contracts.
In view of all this, and of the silence so far of the Secretary of State for Defence on a matter vital to national security, I ask that the House debate this question without delay.

Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
the plan now being considered by the Secretary of State for Defence to hand over to private contractors responsibility for the royal dockyards, including the responsibility for refitting Britain's strategic nuclear deterrent at Her Majesty's Dockyard in Rosyth.
I have listened carefully to what the hon. Gentleman has said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.

PARENTS' AID (No. 2)

Mr. Jerry Hayes, supported by Mr. Andrew Rowe, Mr. Gerald Bowden, Mr. David Alton and Ms Clare Short, presented a Bill to give full party status to parents or guardians in care proceedings; to allow parents or guardians or custodians and certain relatives to apply to the court for an order giving them access to their children in local authority care and to regulate the conditions of such orders; and to require local authorities to prove the need to remove parental rights in court: And the same was read the First time; and ordered to be read a Second time upon Friday 23 March and to be printed. [Bill 134.]

STATUTORY INSTRUMENTS, &c.

Ordered,
That the Fish Farming (Financial Assistance) Scheme 1984 (S.I. 1984, No. 341) be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Archie Hamilton.]

Marks of Origin

Mr. Jonathan Sayeed: I beg to move,
That leave be given to bring in a Bill to provide for the prominent indelible marking or permanent affixing on all mechanical or electrical goods, over a certain value, of the flag of origin of the country that provides the highest content by value of the goods, excluding final assembly.
Despite its long description, the purpose and the application of the Bill are straightforward. The principle that I wish to establish in support of the Bill is one of effective consumer information. As we are prohibited from restrictive trade practices by EEC and GATT regulations, it is essential that I start by showing why this measure would not constitute a breach of those regulations. Although I hope that improved consumer knowledge will cause a shift towards British-produced goods, it is necessary that I show that this measure is equitable.
I suggest that it can be shown that this Bill is a consumer protection rather than a trade protection measure, as surveys before the Trade Descriptions (Origin Marking) (Miscellaneous Goods) Order 1981, as well as the Gallup poll of 1982, show that the overwhelming majority of consumers not only favour but are in urgent need of better origin marking. Our personal experience shows that a British name does not always mean British goods. For instance, we all know the name of Vauxhall, a well-known, so-called British manufacturer, but I have here a large advertisement for a Vauxhall Carlton car which is not British but completely made in Germany. Electronic goods often have so many stickers and labels on them that it is difficult to determine the country of origin even when the origin marking is in English and the label not hidden or torn.
The use that consumers make of the flag of origin on goods is their own business, but I believe that if they are reminded that every £35,000 worth of imported goods means the loss of one man's job for a year, that the proportion of consumer spending on imported goods is 25 per cent. and that import penetration in key areas of our economy is damaging that economy it may persuade them to buy British. I suggest that up till now there has been a lack of origin marking, and consumers have not been able to make the informed choice that they have the right to make. I hope that the existing trade descriptions legislation that will in the summer be considered in the European court will be successfully defended. But I would ask that the Government consider adding to the 1981 order the use of the flag of origin. The final proof that this Bill is not a trade protection measure must be that we have no objection to other countries taking similar measures.
The French and the Danes have had to withdraw their origin marking. However, the Community should be forward looking and I suggest that there is no reason why the EEC should not welcome a standardised system of marking by coloured flags. It is a better standardised system because it is not subject to language barriers. If it enables British or European consumers to choose British or European goods rather than Japanese or far eastern goods we should all be well satisfied.
To show that indelible flag marking is desirable, I shall refer to the existing legislation and show why that has many short comings. First, the Trade Descriptions (Origin

Marking) (Miscellaneous Goods) Order 1981 does not cover mechanical goods. Secondly, it is not sufficiently effective. It states that
goods to which the order applies
are
marked or accompanied by a clear indication of origin'".
That is a sensible idea, but it does not work, because nowhere in the legislation is the method stated, and the methods used are so varied that in a substantial purchase, with a mass of other information, no one recognises the origin, and we have not acquired the habit of checking for the origin of products.
If an indelible and prominent flag—and by "prominent" I mean on a surface visible when the article is in use—were placed on these goods, the consumer would be helped by the simplicity of the measure to look automatically for the country of origin, and this knowledge would become part of the purchasing decision. The value of permanent indelible marking is, in essence, that it gives an awareness of origin. It will affect the pattern of choice and remind people of the responsibility that they bear as consumers in our economy. It will also ensure that people who buy goods from overseas will have continually to justify their purchase of goods other than British or EEC products. I beleive that this is a good thing.
An objection may be that a flag is disfiguring. However, paper labels stuck on with non-water-soluble glues are often far more disfiguring and flying the flag is most unlikely to be disfiguring on the front of a car or by the switches of an electrical machine.
This Bill asks for indelible or permanently affixed markings. By doing so it shifts the responsibility to the manufacturer, whereas the current position is that it is the retailer who is responsible. So this simplification of industrial bureaucracy would offset any marginal price increase that the affixing of a flag might cause.
It is also important to realise that there is the option of a permanently affixed flag or an indelible mark. Therefore, the home supplier who had a large export market would be able to mark goods destined for the home market but not those destined for overseas.
Any trade description measure must face up to the reality that complete items are often made up of parts of different origins. The Bill recognises that by stating that the country of origin is that which supplies the highest content by value, excluding final assembly and profit margin. In other words, the Union Jack will be on principally British goods, not on those just assembled in Britain. The present criterion of "last substantial change" leaves the door wide open for the foreign components to be assembled here and sold as British goods, and that is a profound fault in the present legislation.
This is not a trade restriction measure. It is an equitable trade information measure. If it helps us to identify United Kingdom and European goods and to promote sates of United Kingdom and European goods, and helps the consumer to contribute to the creation of jobs in this country and Europe, I am sure that we shall all be well satisfied.
I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Jonathan Sayeed, Mr. David Alton, Mr. Paddy Ashdown, Sir Geoffrey Finsberg, Dr. Alan Glyn, Sir Anthony Grant, Mr. Michael J. Martin, Mr. Roy Mason, Mr. Hal Miller, Sir David Price, Mr. T. H. H. Skeet and Mr. George Walden.

MARKS OF ORIGIN

Mr. Jonathan Sayeed accordingly presented a Bill to provide for the prominent indelible marking or permanent affixing on all mechanical or electrical goods, over a certain value, of the flag of origin of the country that provides the highest content by value of the goods, excluding final assembly: And the same was read the First time; and ordered to be read a Second time upon Friday 6 April and to be printed. [Bill 131.]

Picketing (Criminal Law)

Mr. Max Madden: On a point of order, Mr. Speaker. On Friday, the Attorney-General made a long statement in the form of a written reply which, in part, stated:
there is no doubt that if a constable reasonably comes to the conclusion that persons are travelling for the purpose of taking part in a picket in circumstances where there is likely to be a breach of the peace, he has the power at common law to call upon them not to continue their journey and to call upon their driver to take them no further. Any person who fails to comply with a police request in those circumstances will be committing the offence of obstructing a police officer in the course of his duty.
The Attorney-General added:
I hope that this re-statement of the legal position, which the Lord Advocate agrees reflects the main principles of the law of Scotland also, will serve to remove any doubts that might remain in any quarter about the strict limits within which pickets may seek to press their views on their fellow-citizens."—[Official Report, 16 March 1984; Vol. 56, c. 279–80.]
It seems curious, Mr. Speaker, that the Attorney-General did not seek an opportunity to make a statement to the House either on Friday or yesterday. You rightly stopped questions on this issue this afternoon on the ground that the matters in question were sub judice. As the courts are looking for the latest guidance from Law Officers and their attention will be drawn to the Attorney-General's statement, which was made in the form of a written reply to a written question, I hope that it will be possible for you, Mr. Speaker, again in the interests of the House, to make representations to ascertain whether the Attorney-General would be prepared to answer questions on these matters from the Dispatch Box. To many of us, his statement in a written answer represents a considerable reduction in civil liberties and the powers to picket as many of us understood them.
Secondly, Mr. Speaker, notwithstanding your actions today in stopping questions on the ground of the sub judice rule, will you be prepared to give advice to the Table Office to enable those of us who are concerned by the substance of the statement made by the Attorney-General on Friday to table questions in the hope that we shall be able to clarify the legal grounds on which his view rests? Many of us do not believe that the statement provides a satisfactory explanation of the law as many of us understand it to be.

Mr. Speaker: The hon. Gentleman raises an important issue. I am bound by the sub judice rule, as are all other Members. I am sure that what the hon. Gentleman has said on the interpretation of the law will have been noted and heard by those sitting on the Treasury Bench. It is not for me to say whether a statement should be made or not made.

Mr. Dennis Skinner: Further to that point of order, Mr. Speaker. I am concerned about the sub judice rule. It seems that a number of those outside the House can take part in discussions while we are not allowed to ascertain, for example, why there are certain rules that the police can adopt in, for instance, escorting those who decide to take part in a National Front demonstration in a city wich has a high proportion of black people living within it. What are the rules that apply to football coaches travelling in this country from areas which suggest that violence may take place? The same considerations apply to those travelling abroad for international matches. It seems that these matters can be discussed by people


outside the House. On "The World at One" today, Sir Robin Day and a professor of law from I think, the London School of Economics took part in a longish discussion about why the Kent miners could in some circumstances manage to win the case yet in other circumstances would be unable to do so.
It seems strange that, in these circumstances, the House is subject to the sub judice rule. We would like to ask the Attorney-General why those who decide to participate in National Front demonstrations are escorted by the police whereas the Kent miners are not allowed to leave Kent. There are many other instances in which a significant part of the population would argue that a breach of the peace is likely to be occasioned and yet restrictions are not imposed. However, the Kent miners and their friends are being kept away from other counties. This is a strange interpretation of the law. It is strange also that Parliament has received from the Attorney-General only a written answer to a written question.
With the exception of a few comments that some of us managed to make during yesterday proceedings, it appears that the Government will not be questioned on this severe incursion into the civil liberties and freedoms of our people, which are to be further reduced. It is a matter not just for the miners but for the many constituents in every constituency who are concerned about it. It is therefore imperative that we have a statement from the Attorney-General, or from another Government Minister, so that my hon. Friends and other hon. Members can put questions.

Mr. Speaker: Order. There is nothing to prevent a general discussion on these matters. What we are inhibited from discussing is specific cases that are before the courts. That we cannot do.

Mr. Madden: Further to that point of order, Mr. Speaker. I am grateful to you for your tolerance. I raised earlier a second issue, whether the Table Office would accept questions relating to the statement made on Friday by the Attorney-General. Would you be prepared to inquire into the acceptability of such questions? It would be helpful to all hon. Members I think, to have your guidance on this matter.

Mr. Speaker: The Table Office is also bound by the sub judice rule. That is the problem that faces us. However there are ways of getting questions in order, and the hon. Gentleman, as an experienced Member of the House, will probably know how to do that.

Mr. Jerry Hayes: Further to that point of order, Mr. Speaker. Is it not right that the sub judice rule applies not only to this House but universally, and the points that the hon. Member for Bolsover (Mr. Skinner) raised regarding discussions of what could happen, that is hypothetical questions, would not come within the sub judice rule anyway as it applies only to matters which are pending before the courts?

Mr. Speaker: The hon. Gentleman explains, rather more clearly perhaps, what I have already sought to say.

Public Accounts

Mr. Robert Sheldon: I beg to move,
That this House takes note of the Sixth to Thirtieth Reports from the Committee of Public Accounts of Session 1981–82, of the First Special Report and First to Eleventh Reports of Session 1982–83, of the First to Ninth Reports of Session 1983–84 and of the Treasury Minutes and Northern Ireland Department of Finance Memoranda on those Reports (Cmnd. 8620, 8757, 8759, 8828, 8995, 9071, 9178 and 9191).
My first duty in presenting the Public Accounts Committee reports to the House is a particularly happy one. It is to pay my personal tribute, and offer the thanks of the House, to my predecessor, Joel Barnett, now Lord Barnett. He is of course much missed by the Committee, and by the House, and his work set standards of good sense and kind good humour which are difficult to emulate. My thanks must go also to Sir Albert Costain, who played a notable part in the previous Committee.
Of my colleagues, I can say only that their dedication astonishes me. When I was first a member of the Public Accounts Committee in 1965, it was difficult to obtain a quorum for even important matters. Today, we have almost a full complement of members at each meeting and, when one allows for the mass of paper which our lucid and eloquent Civil Service presents to us, that dedication is clear and gratifying, and is of benefit to the House.
The gratitude of the Committee must also be extended to our Comptroller and Auditor General, Sir Gordon Downey, who, to general satisfaction, was knighted earlier this year. The relationship between him and the Committee is indeed a crucial one. Complete confidence is required between the two for the work to be carried out efficiently, and both he and the Committee understand this. Sir Gordon and his National Audit Office have the essential confidence of us all.
Of the other officers who serve us, I should mention the Comptroller and Auditor General for Northern Ireland, Mr. Dennis Calvert, and his Exchequer and Audit Department. We have been calling upon his advice more frequently than usual, because of our investigation into the De Lorean motor company. We value his help and his expertise.
The Treasury Officer of Accounts, Mr. Clifford Judd, the accounting officers who come before us, and the witnesses who present these matters to us, have a general agreement with the Comptroller and Auditor General over matters of fact. It is essential that these be cleared before they come before the Committee. The crucial work of the Committee could not be carried out unless there were this general clearing of facts and acceptance of a large amount of the material before it reaches our deliberations. So it is that we have to thank those people who present the reports to us and come before us for that essential work.
This debate is the first that the House has had since the enactment of the National Audit Act. That was the measure introduced by the right hon. Member for Chelmsford (Mr. St. John-Stevas), and, as a result of that Act, which was squeezed in on the very last day before the Dissolution of the House for the general election last summer, the Comptroller and Auditor General is now clearly established as an Officer of the House. As a result of that Act, there will now be a wider range of reports, and we are also enabled to undertake value-for-money audits.
We were disappointed that the Act did not extend to the nationalised industries. It was a pity that the chairmen and others concerned with the nationalised industries did not realise how the House and the Public Accounts Committee operate. They frequently base their views on the actions of Ministers, and sometimes they form an incorrect view and do not realise that the work of the Public Accounts Committee would have been directed only to securing value for money and efficiency in the organisations. That is the way in which we carry out all our investigations.
It is a great shame that it was not considered that the Public Accounts Committee, far from being an interfering busybody, could have been a valuable ally in making sure that the nationalised industries had clear guidelines set for their operations and were enabled to get on with their task without excessive interference from Government Departments. I am sure that we shall return to that point in due course. After all, the Public Accounts Committee has been on record for a long time as being in favour of pursuing public money wherever it may go. In the United States and in other countries, public money is followed to ensure that it is used purposefully, that it is used for the purposes that Parliament intended, and that the way in which it is spent ensures the best value for money. That is something to which we must unquestionably return.
There are 46 reports before us. The number is so high largely because the general election took place last year and, therefore, there was no debate then. As a result, very few hon. Members will be able to do more today than skate over a few of the reports.
In the Public Accounts Committee, even more than in most Select Committees, there is an all-party consensus. That is essential for the working of the Committee. That consensus is easier to achieve in the PAC than in most other Committees. The members of the Committee all have a respect for each other because we have an important duty which is clear, accepted and understood. That duty is to ensure that money is spent as Parliament has authorised and—within the objectives that have to be set out by any Government—in the way that produces the best value for money.
That is the work of the Committee, and we approach it in three ways. First, we ask that any initiative on the spending of public money should have clearly stated and measurable objectives. Secondly, we ask that the monitoring of progress towards those objectives be undertaken so that any failures or inadequacies can be noted and corrected in sufficient time to maintain the original schedule. Thirdly, we ask that the final outcome should be capable of being measured against those objectives. There is the setting of the objective, the monitoring of progress towards that objective and, finally, the need to be able to compare the result achieved with the original objective.

Mr. Michael Latham: Would the right hon. Gentleman not mention one other matter that is important in the Committee's work? It is that in our questioning and our subsequent discussions we deliberately moderate our language.

Mr. Sheldon: The hon. Gentleman is absolutely right. The understatement of the PAC's reports is a noted feature of the House, and the Committee does not lose from that. Indeed, it gains because when a normally quiet person

raises his voice it is an indication that something is amiss. When someone constantly shouts, no modulation is possible and it is not possible to judge the extent of the indignation. That is right and it is a tradition that we would do well to follow. I imagine that it has lasted for a century or more. I am grateful to the hon. Gentleman, who plays such a notable part in our deliberations.
The setting of objectives, the monitoring of progress towards them and the ability to compare the outcome are crucial. We had a good example of all three factors being missing in our debate on the new Estimates. Two weeks ago the House debated one of our reports on premature retirement. The idea behind premature retirement was that the number of administrators in the NHS would be reduced. There was an absence of objective in that no one knew how many were to be dismissed, there was no monitoring of how many would accept voluntary redundancy, and even at the end it was not possible to compare the number who had left voluntarily with the original estimate because it was not known how many had gone or how many were expected to go. That defied the basic criteria that we must set ourselves and others in the public service whose accounts we monitor.
Each of the 46 reports could form the basis of an interesting debate, as did the report on early retirement that I have just mentioned. It might be useful for me to pick out a few themes to give the flavour of the Committee's work and to deal with some serious issues. We are not here just to apportion blame. Our major task is to improve the effectiveness of the expenditure of public money and ensure that we get value for the money that the Government raise from the taxpayer. That must be and remains our task.
I shall give a range of the questions that we ask ourselves and those who come before us. One of the most important considerations must be cost effectiveness and efficiency. We regularly see big spending Departments such as the Ministry of Defence and the Department of Health and Social Security and, within it, the National Health Service. Reports 16 and 17 from the 1981–82 session deal with them. Another consideration is financial control and accountability. In that regard we have the Chevaline report to which I shall refer later. We also consider matters such as taxation, tax avoidance, Customs and Excise and Inland Revenue. We also cover wider subjects such as Civil Service manpower and investment appraisal. We make recommendations as to how these matters might best be tackled and handled.
I shall consider the black economy first. In our twenty-second report of 1981–82 we considered Customs and Excise and the Board of Inland Revenue as well as some other Departments. They pointed out the difficulty in recruiting staff and retaining trained inspectors. The evidence showed that that was a serious problem for the Inland Revenue. It was asked what were its criteria for the extra staff who were expected to produce savings well in excess of their cost. We were conscious that if we raised extra taxation to employ more people to carry out investigations, we must consider the revenue that they would be able to raise and the cost of raising it. The Committee concluded that the employment of investigative staff gave excellent value for money. The Committee was pleased that the revenue departments were trying to improve their information on costs and output as a better basis for decision-making.
We pointed out in the sixth report of the 1981–82 Session on the control of Civil Service manpower that the critical question is not how many civil servants are employed, but what work is obtained from those who are engaged. We repeated in the twenty-second report on the Inland Revenue that the reduction in Civil Service numbers must be balanced by the value to the taxpayer of investigative work. It is the size of the bill to the taxpayer rather than the number of civil servants employed that counts.
In our second report of 1983–84 we considered fraud in the DHSS and in the Inland Revenue. It is valuable to compare the investigative work that we thought desirable in the Inland Revenue with that done in the DHSS. We discovered that in the Inland Revenue, £92,000 was obtained from each official whereas £38,000 was obtained in the DHSS. We also noted that the Inland Revenue estimated the total of the black economy at £4 billion and that the DHSS was unable to give a figure. It strikes me, as I would imagine it does most people, that it should be easier to assess the amount of fraud in DHSS payments than to assess the size of the black economy. Whereas the Inland Revenue was able to do one the DHSS was unable to do the other. At paragraphs 25 and 26 of the second report for 1983–84 we said:
25. We note that most of the detected fraud is perpetrated by individuals for small sums and that DHSS have been giving increasing emphasis to stopping unjustified benefit payments rather than to prosecutions, although the latter are generally successful. We accept that it is more important to maximise savings than to prosecute in every possible case, though we consider it important for DHSS to maintain prosecution at all levels of deliberate fraud, as a deterrent. We understand this to be the Department's attitude.
26. We are surprised at DHSS's attitude to the paucity of information on the extent of undetected fraud. The large gaps which they admitted in their knowledge of this area mean that their existing management information, even after reassessment, will remain an unsatisfactory basis for determining the most cost effective deployment of staff on anti-fraud activities. We are also disappointed that DHSS could offer no informed guess as to the possible cost to the Exchequer of undetected fraud, whether as a result of their benefit studies, their economic advisers' work or the Rayner scrutiny.
It was the lack of information that we thought wrong. Whereas the Inland Revenue was able to make out a strong case for increasing its investigative staff on the basis of its assessment, however vague it might have been, and assess the value of increasing investigative work, the DHSS was unable to make that type of comparison and therefore was unable to say how far investigative work is being best applied. We said that the DHSS should undertake to present some estimate to us in due course as we believed that its task was easier than that of the Inland Revenue.
The Committee's ninth report for the Session 1981–82 dealt with the Chevaline improvements to the Polaris missile system. The Chevaline project commenced in 1972 at an expected cost of £175 million. The latest estimate is £1,000 million or, in 1972 prices, £530 million. The programme is several times its original cost in real terms. The project was expected to be fully operational last year—five years late. The Government intend that Chevaline will be replaced in the early 1990s by the United States Trident 2 missile system.
The Committee is concerned not with defence policy but with financial management and control. The fundamental principle is and must be full accountability to Parliament. It is unsatisfactory and unacceptable that vast

sums should be spent on these matters without accountability. It is imperative that there is full accountability to Parliament.
We produced a critical report, and are now receiving information on defence projects costing more than £100 million during their lifespan. It is essential that the House knows about large expenditures on defence projects. Many people were offended by the fact that there was a massive defence project about which members of the Cabinet, let alone hon. Members generally, were completely unaware. By a special minute, the Committee of Public Accounts obtains information about those expensive projects, monitors them and asks for further investigation by the Comptroller and Auditor General.
I turn to the Committee's twenty-fifth report for the 1981–82 session on the Property Services Agency In the period 1979–80, 35 frauds were notified by the Property Services Agency. The Committee believed that the Property Services Agency played down the significance of the detected cases in its regional organisations, and the Committee said so. The Committee stated:
We do not consider that comparison of these cases with the broad statistics for convictions in the country as a whole can be meaningful; nor did we think it realistic to compare frauds involving long term collusion or conspiracy among civil servants, where the losses are uncertain, with measurable `shrinkage' in department stores. We therefore trust that PSA will not minimise the possible implications of detected serious frauds, nor act on the assumption that the degree of irregularity which has been detected is acceptable.
That is a serious matter. We have long been proud of our high standard of public life. We must be aware of the uncertain foundations on which that rests—the incorruptability of civil servants. A standard or ethos among civil servants means that, if any one were discovered in breach of what was held to be the morality by which the Civil Service lives, some people would be outraged. Not only would that outrage be known, but the offences would rapidly become known as well. That is largely the position at present. The task of the PSA and the House of Commons as a whole is to ensure that we retain that attitude through difficult and trying days.
Obviously, the decline in the number of civil servants and the possible diminution of morale because of that and other matters are among the factors that make it even more necessary to ensure that the PSA's efforts to improve the effectiveness of the measures to prevent fraud and irregularities are continued. The Committee has expressed that belief repeatedly.
The Committee had before it an examination of the Wardale report. Only a week or two ago, the Committee took evidence on that report. We shall, therefore, be issuing a further report on the subject. This must be a matter of continuing concern. It is clear that standards of public life must always be higher than standards in certain private organisations, even if it means that we must pay more to achieve that. The standards that come when public money is spent are different from other standards and must be retained.
The Hamilton college of education was discussed in the debate on the Consolidated Fund Bill, but that should not preclude hon. Members from examining the matter. We are interested in improving the standards of public accountability rather than in making any political points. I wish to ensure that when public property is sold the best value is obtained for it. The Committee's ninth report for 1983–84 dealt with the Hamilton college of education.


That college was built in the mid-1960s for £2 million. It provided residences for 600 students on 51 acres. A decision was made to close the college. Some hon. Members opposed that decision, but that matter does not worry us at present. Our interest is simple and clear, and the Committee can be wholly united on this point. Our task is to ensure that we get value for money on all occasions. The Halliday committee established the ground rules for the sale of property. Those rules followed the sale of Robroyston hospital in 1977. The PAC report states:
Departments are stongly recommended to take professional advice from the Chief Valuer (Scotland) and the Solicitor's Office".
The Chief Valuer said that in favourable circumstances—I stress that point—the property might realise £6 million. Paragraphs 6 to 8 of the Committee's report state that the Chief Valuer recommended,
appointing a commercial selling agent with whom the District Valuer would co-operate; the District Valuer would be able to advise on the choice of agent and make the first attempt to obtain reliable planning guidance. The Solicitor's Office also advised that a commercial estate agent might know of some specialised pockets of potential purchasers in the commercial sector who would be interested in out of the ordinary property.
SED and the Jordanhill Board of Governors agreed that the sale should be handled by the College's own solicitors, who it was felt had as much experience in selling properties as estate agents. The appointment of these solicitors was approved before SED received the Chief Valuer's letter of 9 December. They did not contact the Chief Valuer again until offers for the property had been received.
The College was advertised in each of four papers (The Times, The Scotsman, The Glasgow Herald and The Times Educational Supplement) for one issue in the period 14–18 December 1981
I draw the attention of the House to the fact that that was just before Christmas,
and one issue in the period 11–15 January 1982
in the new year,
About 40 brochures … were issued as a result of the adverisements, but only four offers were received.
The placing of the advertisements and the failure to take the Chief Valuer's advice made the Committee feel sure that that was no way to market a property as valuable as Hamilton college. The governors recommended acceptance of two offers amounting to £680,000, although by then security costs had amounted to £106,000. An amount of £574,000 was obtained for properties which, admittedly, under favourable circumstances, was estimated to realise £6 million. The failure to advertise in such obvious journals as the Estates Gazette surprised the Committee. When the governors intimated that that was the best price they had received, they consulted the Chief Valuer for Scotland and the Solicitor's Office. The advice received was,
that experienced estate agents should be appointed to market the property and that the District Valuer should be involved in exploring planning possibilities with the local authority.
We say in paragraph 16 of our report:
We were astonished to learn that SED had approved the appointment of the Jordanhill College's own solicitor as selling agents without waiting for the advice for which they had asked; and had then made no attempt either to change their decision or to discuss with the Chief Valuer their rejection of his advice.
That, we thought, was language which was strong and apposite to the circumstances of the situation. We made it clear that on any future sales of this kind proper attempts should be made to market property adequately.

Mr. John Maxton: Does my right hon. Friend agree that it is not the practice of the PAC to place responsibility for actions on Ministers rather than on

civil servants? In other words, responsibility is normally put on the Department generally and not on a particular Minister?

Mr. Sheldon: That is right. Ours is one of the few Select Committees which does not take evidence, in the normal manner of speaking, from a Minister. Indeed, we have a Minister on the Committee, and we are always pleased to see the Financial Secretary. It is traditonal for the Financial Secretary to attend only once, but I have made it clear to him a number of times that we should be happy, and benefit from his advice, to see him more often, though we know the pressure of duties on him. Our task is to make sure that the procedures which we consider to be sensible are followed, that the Department tries to ensure that it obtains the value for money that is its task and that lessons are learnt for the future.
As a result of the National Audit Act 1983, we are undertaking value-for-money audits. Such audits always have been undertaken, but invariably they have followed the certification procedures. Those procedures are designed to make sure that the money has gone to the purposes for which Parliament voted it and has not disappeared into somebody's pocket. As a result, the Comptroller and Auditor General and the National Audit Office—the Exchequer and Audit Department, as it was—have in the past found some instances where better value for money could have been obtained, and investigations have been carried out.
As a result of the new National Audit Act, that cumbersome procedure is no longer necessary. When dealing with a substantial volume of expenditure or some new procedure, they can initiate straight off a value-for-money audit, and some of the first of those will be coming forward in the next few weeks; and eventually we shall come before the House and explain the way in which they have worked and how valuable have been their contribution to improving the standard of expenditure of public money.
The seventh report on the nationalised industries concerned us in respect of the way in which corporate plans are prepared. We recommend that sponsor Departments should seek to ensure that all nationalised industries prepare corporate plans annually and provide in them certain essential information, as specified in the 1978 White Paper.
That is important because only when one has corporate plans can one compare one industry with another. Only then can the Government say where public investment can best go. Only when comparing one nationalised industry, in which money can usefully be spent, with another nationalised industry or public body, perhaps where money can less usefully be spent, can the allocation of expenditure be prepared in a sensible way. We hope that that will be done and we look forward to the implementation of that recommendation in due course.
I have spoken of the matters that have been concerning us. We shall be taking evidence on value for money on such matters as the Trident programme; we are at present looking into the De Lorean case—the amount of money that was spent in establishing the motor company in Northern Ireland—and inevitably that will take up more of our time than is usual in an inquiry, but we feel that that is essential in the interests of learning a number of newer


lessons; and we are continuing our examination following the Wardale report into frauds at the PSA. We have an extensive programme.
The Committee has much work ahead of it and the House should be gratified that so many people have dedicated themselves to providing the means by which this House is able to control the expenditure of money and to make sure that, whatever else happens, the taxpayer has confidence that some people care about these matters and are determined to ensure that standards in public life continue to be improved to the best of our ability.

Sir Michael Shaw: I am glad of this opportunity to speak following the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). We understand that through no fault of his, he was unable to be present at our deliberations the other day. We missed him and we are glad to have him leading us today. It is right for me to say from these Benches how much we support his warm words of thanks to the man who formerly represented Heywood and Middleton, Lord Barnett, who was Chairman of the Committee during most of the deliberations on the reports that are now before the House. We remember him not only with affection but with admiration for the skilful way in which he led us through our discussions and inquiries.
We also echo the right hon. Gentleman's comments about the former hon. Member for Folkestone and Hythe, Sir Albert Costain, who probably set a record for service to the PAC. No debate of this sort would have been complete without him. He always seemed to achieve his objective by appearing quite late in the debate, whereupon he would sum up in his own inimitable way the conclusions that had been reached by the Committee, always finding a few points of his own that were completely individual but relevant to the discussion. We miss him.
As the right hon. Member for Ashton-under-Lyne said, we are today discussing 46 reports, together with Government reports. The mind boggled at being told late in the weekend that one would have to address the House on those reports, particularly when one had a complete constituency programme built through the weekend. Nevertheless, hon. Members taking part today will have done a great deal of homework on the relevant documents.
As I read the reports, I felt that the work of the PAC was developing all the time. As the right hon. Member for Ashton-under-Lyne pointed out, there have been some significant changes during the period about which he spoke, as a result of which we shall find that our responsibilities have increased. We are lucky in having Sir Gordon Downey as our Comptroller and Auditor General. He is fashioning his new department well and is of invaluable support to us in the help that he gives.
A. number of inquiries that are on the stocks will make us think carefully about the Committee's future role and how best to discharge it. Some of the matters that we are looking into are bigger than those we have considered before. It would be wrong for me to say more at this juncture because we shall finalise them in future reports.
I emphasise, as I did last week when I spoke about the National Health Service, and as did the right hon. Member for Ashton-under-Lyne this afternoon, that the PAC takes an all-party approach. Speaking quietly is part of it. If we got excited and used extravagant words, that all-party approach would quickly break down. As it is, tempers are

kept cool, the facts are considered as they are and conclusions are drawn that may be unpleasant to one side or the other. We have a duty to the House to play it that way. The House would be the loser if the party element were carried to all its activities.
There are 46 debates—reports, I should say.

Mr. Latham: One debate.

Sir Michael Shaw: Yes, one debate. The more significant fact is that most of the reports were drawn up by a different Committee. Many of those who were deeply involved, including some hon. Members present today, are no longer on our Committee, being engaged now on other duties. Much of the value of those reports lies in their being implemented quickly, and discussed as quickly as possible. The value of debates such as ours this afternoon is lost when so many reports are involved. Some of them have taken a long time to produce, and discusssions on some of the earlier reports began in 1981. That is a long time ago. Many different people were involved at that date.
Having said that, I am bound to question whether we need more frequent debates. I believe that we do, but our next query is, "Do all the reports need debating?" That is much more questionable. Knowing the habits of Leaders of the House, as I do, I believe that more debates are unlikely. If it were possible to limit the number of debates, some reports could be taken on the nod, leaving room for those that are more controversial or that are worthy of discussion, which is perhaps a better way to put it.
I have heard one or two hon. Members, who should perhaps know better, ask whether the PAC is really effective. No doubt other hon. Members have heard that question asked, too. They believe that our tone is not strong enough, yet recent events have shown that even the mildest review—I shall go no further than that—seems to have the most alarming effects. The Committee is effective. The only way forward, if earlier reports are wanted, is to insist on that and to accept at the same time that it might be possible to draw lines around what is necessary for discussion and what we can get through on the nod.
Many of the reports have been largely overtaken by events, although those events have been partly influenced by the reports. Although there have been no debates on certain reports, they have had an effect and helped events. The right hon. Member for Ashton-under-Lyne mentioned the Property Services Agency in relation to frauds and irregularities. We are still working on that a second time around, as it were.
The financial arrangements for the Exchequer and Audit Department are water under the bridge, but the report was effective and valuable. The PAC is inquiring into drugs, sales of Government shares and costs paid to opticians. The reports on drugs and opticians must have had an effect on later Government action. In spite of a lack of debate—we would have welcomed an earlier debate—the Committee has not been without effect on those matters.
This afternoon, I shall raise two matters from the many issues that could be raised from all these bundles of paper. The Chevaline improvement was also raised by the right hon. Member for Ashton-under-Lyne. We were all rather shocked at the escalation in project costs from £175 million to £1,000 million within about 10 years. Our


criticism, as we said in the report, is that the costs were not disclosed and that there was no requirement that they should be. That will not do, and must stop. It cannot provide for proper supervision of expenditure by Parliament. The fact that the escalation was largely unknown is a very serious criticism.
The ninth report of 1981–82 concluded:
There is no doubt … that the history of the Chevaline up to 1976 was an unhappy one and is open to serious criticism on grounds of failure to recognise and provide contingencies against the major problems involved in a complex and novel field.
This is the point that I want to emphasise. We go on to say:
It is not the task of this Committee to deal with policy objectives in defence matters.
We had that matter out when discussing one of the torpedo developments. We criticised the financial arrangements, and the laxity in expenditure on development. We came in for a good deal of criticism because of our strictures on the development costs. Ministers and others thought that we were trying to criticise the weapon itself, whereas we were criticising the control over expenditure. I emphasise, as the report says, that it is not our job to establish the quality of defence expenditure. That is for the Select Committee on Defence. Our job is to see that cost is kept under control, and we must always keep that problem well in mind. There is a clear difference between our duty and that of other Select Committees. The PAC deals entirely with costs and the control of costs, on behalf of Parliament.
We end the report by saying:
Full accountability to parliament in future is imperative.
We can maintain that only be getting the information and, where necessary, by criticising it. The quality of the weapons concerned is not a matter for us to discuss.
My other point is about the second report of the Public Accounts Committee, 1982–83, entitled:
Development of Internal Audit in Central Government".
The PAC was greatly concerned at the lack of an adequate system of internal audit and of adequate staff to carry out the work. In 1981 we were concerned at what we called the standard of internal audit in central Government. In the second report, we welcomed the introduction of a basic training package for new entrants. During discussions on the first report, evidence was taken as a result of my questioning, which is referred to in the second report, on page 19. I asked Sir Anthony Rawlinson:
Reverting to the last report, one reread the evidence of Sir James Hamilton and Sir Brian Hayes and I got the strong impression at that time that they were very much in favour of having most, if not all, of the internal audit staff, doing a tour of duty from the main body of their staff and they felt that this was a good thing: I frankly doubted it in many cases but that was their view. Has there been a basic change of view in the departments on this?
Sir Anthony replied:
There has not been a change of view.
If the internal audit department is regarded solely as a stepping stone in the career of a civil servant, who is moving just for a tour of duty into the internal audit side and then back to his normal duties, I doubt very much whether the job of the internal audit department is done well. I was told that that gives the staff added interest, but I do not believe that anybody in the internal audit department who expects to go to another branch of the same department in two years' time will be unduly critical of what is going on in that department. Perhaps it is a good thing to spend some time in the other department, but the

main control and thrust in it must come from somewhere else. There must be much more training of specialised staff, such as accountants, within the Departments and the Civil Service in general. I am glad to note that in our report we received an assurance that that was beginning to happen and that there were special training courses and so on.
I raised this matter the other day, and still have not received an answer. There is in the Civil Service, proud though we should be of the quality of our civil servants, an outdated notion that, if one is to advance in the Civil Service, one must aim at being a policy adviser. So much work in the Civil Service revolves around management, not policy. In the past not enough emphasis has been laid on the need for management skills.
Therefore, I should like to ask when we shall get a replacement for Sir Kenneth Sharp. His work brought the importance of that aspect of work in the Civil Service to the fore and much more to its rightful place. Time and again, as we saw in the report on early retirement that we discussed last year, matters have not been managed correctly or objectives set out clearly. The follow-through has not been watched carefully, so the results were not compared properly. That work must be done on a much wider scale in future. Every time a new project comes forward, let us have proper planning. We should not just establish the policy and go ahead with it. That is not the way to do it. One may think of a good policy, but let us work out the management consequences before we get cracking. Therefore, I ask again: when shall we get a first-class successor to Sir Kenneth Sharp?

Mr. William O'Brien: I should like to express my appreciation to the present Chairman of the Public Accounts Committee, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), for his guidance as Chairman. In the Committee, the Chairman gives a lead with searching questions and in-depth consideration of the subjects, which is most inspiring. As a new member of the Committee, I find the help and guidance given by the Chairman most encouraging.
There are 46 reports before us. As was said by my right hon. Friend and by the hon. Member for Scarborough (Sir M. Shaw), many subjects are covered by them. I shall refer to the eighth report of 1982–83, which is entitled:
The Joint Financing of Care by the National Health Service and Local Government.
It has been said that many of the reports have been overtaken by events. The last time that the House considered a report by the PAC was in March 1982. It is obvious, therefore, that some reports have been overtaken by events. The eighth report fits that description in some respects. It states in paragraph 1:
The aim is, so far as possible, to provide complementary services through the NHS, which provides hospital, primary and community health care, and local authorities, which provide social services including residential and day care, home helps and meals on wheels.
One can see that events in local government and the Health Service have developed to such an extent because of economic controls that the recommendations in the eighth report are now outdated. In this report, as in others, and in the meetings of the PAC, the theme is value for money and accountability, as was said by the Chairman. We must accept that there must be some demonstration of accountability. In many instances the Committee extracts


information about who is accountable for what responsibilities and duties. In the recent past, such matters have been highlighted in more than one instance.
The work of the Committee of Public Accounts and the way its reports have been presented, ensure that people who are accountable carry out their duties responsibly. The eighth report relates to the work of the Department of Health and Social Security and joint financing by that Department and by local government.
The Committee has spent, and will spend, many hours considering the work of the DHSS, the services it provides and their value to the people in need of and receiving them. The cost of services must be considered in terms of their value to the Department and to the people receiving them.
The principle behind joint financing is that the long-term services normally provided by the DHSS may be better provided by local government health and social services. In under two years the report affected Government policies, and Government policies also affected the principles behind and the work outlined in the report. The points made in the report can be influenced by various Secretaries of State. That is illustrated by the Department of the Environment.
The Department of the Environment is responsible in the main for monitoring local government expenditure. A change in the level of government expenditure can influence joint financing by the area health authority and the social services department in local government. It is clear, therefore, that the reduction in rate support grant and the effect of proposed legislation could influence the level of services provided by joint financing.
Paragraph 2 of the eighth report states:
Jointly planned social services projects will normally be financed by the local authorities primarily responsible for them from their ordinary budgets. In order to help finance such projects in the short term health authorities in England have since 1976–77 contributed towards the costs of specific capital schemes, such as the provision of day centres, and to revenue expenditure on, for example, additional social workers".
Against that background I support the view that much of the information contained in the report can be overtaken by events brought about by Government policies and the decisions taken in the Chamber.
The report continues:
As the NHS funds are being used, health authorities need to be satisfied that such jointly financed schemes are in the interests of the NHS as well as the local authority and could be expected to make a better contribution to total care than if the funds were directly applied to health services".
Even that recommendation is out of date because of developments in the Health Service over the past 12 months. Value for money and accountability are matters for which—I agree with other hon. Members—some Departments must have a rolling programme. The Committee should take particular interest in the DHSS to ensure that it is up to date with the report's comments.
Paragraph 11 states:
We note that health and local authorities will jointly specify the detailed purposes for which the grant is to be expended, the services to be provided and their cost".
We live in a changing world and therefore we should request opportunities to consider particular health services, in conjunction with social services, to ensure that we get value for money and the services necessary to maintain the increasing numbers of the elderly, and those long-term mental patients whom the local authorities' social services departments are being requested to take over.
It is suggested that Health Service resources should not be tied down to long-term patient services, which can be maintained in the local government sector. There is nothing wrong with that approach, providing we ensure that resources are available to care for those people and to maintain the service.
Paragraph 12 states:
As to the effectiveness of joint finance and the associated new scheme"—
at that time, people were referring to new schemes—
we accept that since the policy of successive Govemrnents in providing alternative care outside hospital is to improve the quality of life, community services could be cost effective and good value for money even if they cost no less and possibly cost more".
That view was expressed in the report then, but it is not being considered by various Departments. I refer to the Department of Health and Social Security and the Department of the Environment that caters for local government social services.
Paragraph 12 of the eighth report states:
care outside hospital is to improve the quality of life, community services could be cost-effective and good value for money even if they cost no less and possibly cost more.
That view should underly our examination of the matter.
The same paragraph continues:
However, we consider that there are a number of reasons why the cost-effectiveness of the schemes in meeting this policy objective will need to be kept under review by the health departments.
The Committee should keep that point in mind because it has an effect on the way of life of many people. We have a responsibility to consider the services provided to the people who need them at the same time as we discuss value for money and accountability.
Paragraph 13 states:
First, since district health authorities will be able to guarantee continuing annual payments to local authorities and voluntary organisations for people transferred to community care, they will be entering into virtually open-ended commitments involving a permanent transfer of NHS funds.
Although that paragraph states that there will be continuing annual payments for services we know that the Government are trying to maintain public expenditure levels and that some of the joint financing of annual payments being made in the late 1970s and early 1980s has been cut. Paragraph 13 continues:
Second, the sums involved could be substantial, especially in view of the expected rise in the numbers of very elderly, who will undoubtedly place a high demand on community care.
We have had reports from various Departments which show that the number of elderly people in communities is increasing and that the responsibilities placed on local authority social services departments are also ever-increasing. That matter should be kept under review and there should be reports from the PAC to ensure that we are receiving value for money at all times.
Paragraph 13 further states:
Third, DHSS expect it to take years to transfer into the community the 20,000 mentally affected in-patients presently in hospital, since health authorities will be obliged to make the transfers at no extra cost and could therefore find it difficult to finance community care facitilites in advance of realising NHS savings.
That is correct. There is a policy of transferring the responsibility for National Health Service patients to the local authorities. We should accept the report's recommendation to keep that matter under review.
The recommendations of the Royal Commission on the National Health Service run side by side with the points I have been making. The commission published a


consultative paper called "Patients First". We should study that closely, because if we are to pursue the principles and policies I have mentioned we should keep those matters in mind.
The Chairman of the Committee and the hon. Member for Scarborough expressed appreciation for the work of the Comptroller and Auditor General. I believe that the Committee is well served by Sir Gordon and his staff. The Committee receives regular constructive reports from them and, in the long term, that also serves the House. I wish to be associated with the appreciation already expressed for the work done by that Department.
One of the first questions that I asked Sir Gordon was about audit control. The new arrangements for audit have been referred to, but computer auditing is one of the matters that worried me. There is greater reliance on, and increased services provided by, computers in all Government Departments. If the Committee is to do its job effectively and maintain the spirit and principle of ensuring value for money and accountability, that must apply right across the board. It is against that background that I questioned the value of computer auditing. The Committee was advised that there are sufficient trained accountants and other people in the Auditor General's Department to ensure that there is a proper audit of the computers.
Various frauds have been referred to. Without a doubt, computers will provide the greatest opportunities for fraud if we do not keep them under control. I was satisfied by the report that that matter is well in hand.
Nationalised industries have been mentioned. As a new member of the Committee, I was to some degree disappointed and surprised to find that the PAC is not involved with expenditure by nationalised industries. I was concerned with nationalised industries before I entered the House and I thought, therefore, that we should be studying the operations of nationalised industries and their expenditure of public money. I hope that some time there will be an item on the agenda of the PAC that will allow us to examine the matter and to make out a case for studying the expenditure of nationalised industries. I hope that we shall consider that in the near future.
The point has been made that the Committee must ensure that the money allocated by Parliament to the various Departments is spent for the purposes for which it has been approved. The Committee can monitor that aspect of expenditure. The Committee spends time questioning civil servants and pressing for details on expenditure. It specialises in asking questions and in trying to bring forward reasons as to why money has been spent on certain things. When there has been a request for additional money the Committee makes extensive inquiries about it. Because of the experience of the officers and members of the Committee, it would be helpful to the nationalised industries and to the House if we were given the opportunity to ask questions and to comment, as has happened on defence and the National Health Service.
The reports that are before us are voluminous in number and in content and should be given all the consideration they merit by the House. I hope that there will not be a two-year time lag before future reports are debated.

Mr. Michael Morris: I should like to be associated with the remarks of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and of my hon. Friend the Member for Scarborough (Sir M. Shaw) about our former chairman and colleagues who were previously on the Committee, particularly Sir Albert Costain. In addition, I should like to pay tribute to the right hon. Member for Ashton-under-Lyne. It is a pleasure to serve under his stewardship, not least because I am now getting coloured pieces of paper to differentiate one subject from another.
Before I go into the substance of some of the reports, I point out to my hon. Friend the Member for Bosworth (Mr. Butler) that although I shall not be commenting on Northern Ireland matters today, the De Lorean inquiry has opened a Pandora's box which leads me to believe that the Committee has been perhaps a little too sympathetic to Northern Ireland's financial problems. I suspect that when we next discuss public accounts, my hon. Friend, if he is still in his present position, will be fairly busy.
I contrast this debate, covering as it does 46 reports dealing with over 60 subjects, with what happened recently when we had one day's debate on Estimates covering just two subjects. I think that you will confirm, Mr. Deputy Speaker, since you were in the Chair, that each of those debates was substantially over-subscribed. Allied with the plethora of Fridays when we discuss private Members' motions, that suggests that something is wrong with the organisation of the parliamentary timetable. Although it is not the responsibility of my hon. Friend the Financial Secretary to the Treasury, I hope he will draw the attention of the Leader of the House to the fact that we cannot go on in this manner. We lose immediacy, as has already been said, but also—this is important—the opportunity for hon. Members who are not on the Public Accounts Committee to add to our deliberations by debating these matters so long after the event.
When I saw the large number of reports, I was tempted to comment upon many aspects, including the National Health Service, one of my first loves but one on which we had a good debate recently. I suspect that my hon. Friend the Member for Crawley (Mr. Soames), who may seek to catch your eye, Mr. Deputy Speaker, may have one or two additional points to make on that.
I was very tempted to go into the Ministry of Defence in some depth because it is a little time since we have considered the financial dimensions of that Ministry on the Floor of the House. In our Committee we used to be traditionally served up by the Ministry of Defence with the fact that it had overspent by between £250 million and £500 million. It became a regular tour de force with the then permanent secretary, now retired, as to what his latest assessment of overspending would be. Indeed, we have great problems. My hon. Friend the Member for Scarborough has referred to the Chevaline report, the ninth report of 1981–82, and the fact that Parliament did not know what was going on, despite it being a £1,000 million programme. My hon. Friend quoted paragraph 19. The concluding paragraph, paragraph 20, sums it up in the last sentence when it says:
Full accountability to Parliament in future is imperative.
If I put "Trident" in brackets after that, I hope the Ministry of Defence will recognise that the Public Accounts


Committee will expect and, if it does not get it, will seek full information on the financial implications of that programme.
If the rumours of an underspend this year of about £280 million on top of the £240 million cut that the Ministry of Defence took earlier in this financial year are correct, we have come from an overspending of £500 million to an underspending of £500 million. While I am sure that my hon. Friend the Financial Secretary and the Treasury will be delighted if they have that sort of money in hand, it is just as bad in financial planning to underspend as it is to overspend.
I want to deal in depth with just two issues, although they are covered in several reports; the first concerns staff and the second the nationalised industries. Starting with staff, the twenty-second report of 1981–82 was concerned with the Board of Inland Revenue, Customs and Excise and the Department of Health and Social Security. As my hon. Friend the Member for Scarborough has mentioned, the black economy was estimated by the Inland Revenue at about £4 billion. The Inland Revenue said in its evidence to us that it believed it could make some inroads into the problem by the recruitment of 400 extra staff, of whom 70 would be exploring experimental areas. The results that department has achieved are interesting. It gave us evidence that with 1,870 investigators it had raised £173 million, or £92,000 per member of staff. Customs and Excise give us evidence that with 4,000 extra investigators it had raised £150 million, or £37,500 per person. The Department of Health and Social Security, dealing with fraud, with 2,500 staff had raised £40 million, or £38,000 per person. In addition, through the fourth category of employers' contributions, where new selective techniques have been used in my constituency amongst others, it was reported that £25 million had been raised in 40 weeks—or £170,000 per person.
I support wholeheartedly the efforts of my right hon. Friend the Prime Minister to reduce the global number of civil servants. That overhead factor is far too high in relation to our GNP. I go all the way with the Prime Minister in her attempts to reach a target of 630,000. She has got very close to that in two Parliaments, with a reduction of 100,000 in overall numbers. My hon. Friend the Financial Secretary should note that there are Departments of State where people of calibre—I emphasise "calibre"—could usefully be redeployed.
I had a petition from my Inland Revenue staff in Northampton 1 and 2 districts, complaining about the closing of PAYE files. I had to tell them that I had little sympathy with their petition because most of the files were inactive or had tiny amounts. However, I was sympathetic to stiffening up the investigating element of senior tax officers and senior tax inspectors. In paragraph 11, the report refers to the need for special measures to secure and retain the required specialist staff. I hope very much that the Government will take on board that paragraph, because those senior officers are extremely valuable members of the public service, and we should support the work that they do.
That, in a sense, was the secondary issue that I wanted to raise. The primary issue that I want to raise this evening concerns the broad public sector and, in particular, I want to refer to the sale of public assets. The issue covers a great number of reports. When we look back on the period in office of my right hon. Friend the Prime Minister, I believe that one policy aspect of her Government and of my right

hon. Friend the Chancellor that will be remembered is the successful return to the private sector of the monoliths of many of our nationalised industries. I pay tribute to my hon. Friend the Member for Eastbourne (Mr. Gow), who was here a few moments ago, because between 1974 and 1979 he pricked the House with a continuous flow of ten-minute Bills to denationalise one public sector area after another. He provided the necessary stimulus to many of us to look at the area in great detail.
I want to consider three aspects of policy connected with the disposal of assets—the disposal of assets of a non-trading nature, the disposal of assets of a trading nature, and the flotation or privatisation of those assets. I shall take each separately, because there are different implications in each of them. I am sure that the hon. Member for Glasgow, Cathcart (Mr. Maxton) will enjoy the first one, which is the 1983–84 ninth report on Hamilton college.

Mr. Maxton: I shall.

Mr. Morris: The Chairman of the PAC has already referred to the details of that disposal, but I think that it is worth setting the scene. It was closed in 1980, sale agreed at £680,000, replacement value of £20 million, cost of £2 million, no public sector bodies interested in it, guidelines firmly laid down by the Halliday committee in 1980. The chief valuer was absolutely right when he made a clear recommendation and said that the value might be £6 million. The Scottish Education Department chose to ignore that, and went along with the board of governors' recommendations, and used a local solicitor. The key lesson for any Government, of whichever political party, is that where agreed procedures are laid down they must never be flouted unless a conscious decision is taken to do so. That is the implication of that exercise.
For another disposal of assets of a non-trading nature, I go back to the eighth report of 1982–83 on surplus NHS lands and buildings. I knew that I would not be able to resist the temptation to go hack to the Health Service. The procedure here is that health authorities seek the professional advice of the Inland Revenue 'valuation office. In that report we were told that, in 1981–82, 1,424 acres of surplus NHS land had been sold for £20 million. That was a valuable contribution to the Exchequer. However, it was interesting that, at 31 March 1982, a further 6,445 acres were awaiting disposal—nearly 10 per cent. of the whole NHS estate. I do not know what the figure is today, but I am willing to bet that it is still substantial. May I add, for the record, that for 10 years I have been trying to persuade the health authority to sell about 15 acres at Mansfield hospital, right in the middle of Northampton. The report gives examples of land that has been held for over 12 years, in the hope that the health authority would get a better price some time in the future.
That was the story in England. In Scotland, the situation is almost as dismal. In 1978–79 and since, according to the evidence there, there has been little effort at disposal, and the reason given for most of that is the fiasco of the Robroyston hospital.
Then we go to Wales. It is amazing how, whenever we go to Wales, we find something even more interesting. We were told in the inquiry that there was little information about how much land was surplus in Wales, apart from the fact that it was estimated, at March 1982, that 1,080 acres were surplus to requirements. That was 26 per cent. of the


land stock of the Health Service in Wales, yet no one had done a proper analysis of whether that was the absolute amount.
There are incentives to sell, but I suggest that they have not worked to date. Paragraph 30 of that report suggests that there should be a notional rent charge for under-used assets. However, the Treasury did not favour such an approach. I hope that my hon. Friend, when he winds up, will tell us that the Treasury has changed its mind or found an alternative stimulant to health authorities to sell. Indeed, the Treasury minute went on to say in paragraph 53 that
the introduction of legislation to provide departments with the power to seek planning permission
was being considered. That was to obtain any gain, rather than to sit on it for 12 years. Again, I am not aware of any progress on that front.
So much for the disposal of assets of a non-trading nature. I come to the disposal of assets of a trading nature. Here I refer to the twentieth report of 1980–81, which was picked up again in the third report of 1983–84, relating to the Department of Industry and British Leyland at Bathgate. That report suggested that performance indicators were needed in the accounts of a national industry such as British Leyland, and that it was necessary for all nationalised industries to consider having them. May I point out to my hon. Friend the Minister that it is not necessary—it should be mandatory for the annual accounts of any company operating under public ownership to contain performance indicators. Indeed, I go further. There should be a common accounting basis. It makes a mockery of a situation in which the underperforming nationalised industries always give their figures on a historic basis, and those that are doing well always do it on a current costing basis. Clearly, both hide the truth. I hope that before long the Treasury will say, "Enough is enough," and that we shall have a common basis.
That report went on to say, reassuring the Committee to a degree, that 75 per cent. of the asset sales that we considered then had been covered by the memorandum of agreement but—inevitably, there is the "but"—the evidence was that British Leyland had failed to consult the Department on a major and substantial transaction which had an element of tax avoidance. I say again to my hon. Friend the Minister that it ill becomes the public sector to be in the vanguard of tax avoidance schemes, because inevitably there are major dangers of charges of tax connivance. That is something that we as parliamentarians cannot accept.
Finally, the report has the salutary paragraph that refers to the definition of the value of disposals. We talked about a "probable cash value" realisation which
was substantially less than the book value of the assets
which was substantially less than the actual cash value that we got. These were semantic discussions, but they serve to show that, when we are dealing with the valuation of assets in the public sector, the one thing we want is a realistic valuation and not one that looks good on paper but bears no relation to real life.
On the third aspect, which has come to be known as privatisation, I refer to the tenth report, dealing with the Department of Industry and the sale of assets. In paragraph 24 the report quite rightly says that the maximum return

to the Exchequer is not the only criterion to be used when it comes to floating off a public sector company, but that there are other policies which it may well be necessary to take on board. We say in the report that Parliament has the right to expect the maximum return "consistent with the policies" of the Government of the day. In that report we looked at British Aerospace, Cable and Wireless and Amersham International, and the sale of British Petroleum shares on two different occasions.
The report took the view that it was fair to suggest that in the British Aerospace sale the Department of Industry had followed a learning curve: errors were made but, in a sense, they were understandable errors. Then we had the launch of Britoil, when a substantial amount of the stock was left with the underwriters. As we say in our report, it is easy to look back with hindsight. Nevertheless we drew certain conclusions, one of which is that we have an obligation as a Parliament and as a Committee of Public Accounts, no matter how enthusiastic we may be as individual Members to liquidate the vast majority of the public sector—I will nail my colours to the mast because I believe that that is the right policy—to tackle this vexed question of the value of assets prior to sale. A recent, very interesting report analysed oil companies and showed that Britoil was the only one whose share price reflected only 50 per cent. of the asset valuation, when all the others were very much in line.
I point out to my hon. Friend the Financial Secretary that this question will not go away. As we go into the very large-scale privatisation of British Telecom and British Airways, to name just two—and we have a programme in the public expenditure White Paper of at least £2 billion a year for the foreseeable future; I hope, for all our sakes, that that is an underestimate and I shall encourage my hon. Friend to take it further—there must be as professional a valuation of the assets as we can obtain before the launch. In that way, we will, consistent with whatever the policy of the Government may be, contrive a fair deal for the taxpayer.
Across these three categories of disposal of public sector assets—trading, non-trading and ownership—the Treasury must urgently review the guidelines on the sale of land and building assets by all Departments of State. We need to ensure once and for all that in England, Wales, Scotland and Northern Ireland each Department of State is fully aware of the guidelines, so that in 12 months' time we do not find thrown up in the PAC some other Department of State that has forgotten to use them.
Secondly, I re-emphasise my earlier point about ensuring that all public sector accounting is done on a common basis. Whilst it cannot be done overnight, we should have a target date for a clear-cut analysis of historic cost accounting or current cost accounting. Thirdly, we need consensus on the valuation of assets prior to sale.
Turning to the seventh report of 1983–84 on the nationalised industries, the House will recall that the Government in their wisdom rejected the Bill presented last summer by my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas), for which I was the unofficial whip, and thereby the opportunity for Parliament and the PAC to monitor the performance of nationalised industries. It was claimed at the time that the combination of financial targets and the reports of the Monopolies and Merger Commission would be more than adequate to keep a steady hand on the tiller of the nationalised industries.
Without wishing to be harsh, I submit to my hon. Friend that the submission now looks pretty weak. It has not worked for the National Coal Board, as we found in the recent debate on a Supplementary Estimate of £290 million, when we were also told that there would be another £200 million in the wings and, in addition to that—sotto voce—would be whatever was decided as a wage settlement. It has not worked for the Electricity Council, which suddenly discovered that it needed an extra £300 million out of the back pocket.
I will not detail the conclusions of the seventh report—they are there to be read—but they clearly show that in the case of British Telecom, the British Railways Board and the National Coal Board the Departments' controls were not working, that the financial planning did not exist and that there was no reporting. In almost every aspect that we examined, the Departments of State were failing systematically to monitor those nationalised industries. We looked at only three. I assume, being slightly mischievous, that they were probably the best three. We were not allowed to look at the others. They were probably a great deal worse—but I may be unfair to my hon. Friend.
We have to find a way—I hope that it will be whilst I am in the House, and I have every intention of remaining here for a good many years—for Government and Parliament to monitor what happens to public sector money, particularly in the nationalised industries.

Mr. John Maxton: I agree with the hon. Member for Northampton, South, (Mr. Morris) that we must always keep very careful control of the spending of public money. We have to make sure that the money is spent on providing the services that it is supposed to be spent on. It is not the job of the Committee of Public Accounts to try to save money at the expense of the services that are being provided by the Department that it is considering. There is sometimes a danger of hon. Members on the Government Benches falling into that trap—not those who are members of the Committee but some of their hon. Friends.
I should like to echo what has been said by those hon. Members who have referred to our Chairman and past Chairman and the way in which they have guided the Committee. Both have done a tremendous job. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), the present Chairman, has undertaken a difficult task in following Lord Barnett. Nevertheless, he is fulfilling it with a quiet confidence and skill which most of us on the Committee much appreciate.
I pay tribute to a member of the Committee who served on it for a long time but who has now left, although he is still an hon Member. I refer to my hon. Friend the Member for Fife, Central (Mr. Hamilton). When I first went on the Committee, I remember the advice he gave me and the honourable and worthwhile part he played in our discussions.
The PAC is a unique Committee in many ways, and I consider it a privilege to be on it. It is unique in terms of its age, because it is the oldest. It is unique because it does not consider things in the same political way as the other Committees. It looks at spending and does not question Ministers. It is unique in one other way, in that it is the one Select Committee with a member of the SDP on it, although when the alliance parties were fighting over the

places on the Select Committees recently they conveniently forgot that fact. The Committee has that privilege, and I am glad to see that the hon. Member for Caithness and Sutherland (Mr. Maclennan) has now joined us. I hope that he will speak later.
The PAC has its failing. We have a separate accounts department supporting the Northern Ireland Office and giving us evidence purely on Northern Ireland. There is a separate Scottish Office, which has as much power in Scotland as the Northern Ireland Office has in Northern Ireland, and, as a Scottish Member, I find it strange that we do not have a separate Scottish accounting office. After all, we have separate Scottish law, and that law is sometimes different in terms of accountancy. We have specially trained accountants. Someone who wants to be an accountant in Scotland will find it difficult to get a job elsewhere, just as someone who has trained in accountancy elsewhere will find it difficult to get a job in Scotland. In view of the uniqueness of the Scottish Office, there may well be reason for having a separate Scottish accounting office.
I do not see the two Ministers from the Scottish Office who are present nodding in agreement with me. They may feel that their affairs and how they spend money would be more carefully looked at if there were such an office considering purely Scottish matters. Some hon. Members may suggest that I am perhaps getting rather political in what I am saying. However, the PAC, in carrying out its job, tries to act in a non-political way. It is right that when the members of the Committee are working together in the Committee, questioning and drawing up and finalising reports, they must try to get a consensus and to cross political barriers.
Once those reports are produced and we have debates such as this, that political consensus should not continue. I am sure that Conservative Members do not expect me to be non-political—and the Committee and the 46 reports provide an enormous amount of political ammunition for both sides of the House, although that may be less true of the minority parties. There are many things in the reports that attack the philosophy that I stand for, and there are many things that give me ammunition for my political philosophy.
We should not follow the line that these debates are academic. I find it disappointing that almost the only hon. Members wishing to contribute to the debate are members of the PAC. That is wrong. These reports are full of political ammunition for other hon. Members to use. I have spent some time this afternoon trying to persuade some of my hon. Friends who have special interests in, for example, the Health Service, the Scottish Development Agency, hospitals, drugs, and so on, to make a speech in this debate. Now is the time for them to do so.

Mr. Robert Maclennan: I follow and agree with the hon. Gentleman's argument about the non-partisan nature of the Committee and feel that it supports the position of the alliance parties. Nonpartisan probing of the Government can be as effective as the brickbats that the hon. Gentleman is more accustomed to throwing across the Chamber. He should not judge the effectiveness of the PAC by the attendance in the Chamber. Its effectiveness is almost the reason why the Chamber is empty. We have done our work well.

Mr. Maxton: I shall return to the hon. Member's point about effectiveness. As a member of the SDP, he should


know that it claims that it is not involved in the dirty party politics in which the rest of us get involved. The personal sniping in which his party indulges at elections and in the House makes nonsense of that claim. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is looking at me aghast, and I agree that the Liberal party indulges in it slightly less than the SDP in Scotland. I cannot be too rude to the hon. Member for Caithness and Sutherland, who was best man for a friend of mine, and I have to be careful what I say about him. However, the SDP indulges just as much in party politics as the other political parties, and its only problem is that it is a minority party and therefore cannot take part in the discussions between the two major parties about political philosophy.
Let me deal briefly with the effectiveness of the Committee. It is worrying that some of the recommendations, even relatively minor ones, of the Public Accounts Committee are not taken up by the Treasury. For example, we produced a report on dog licences in the 1982–83 Session. It was a minor report and not of any great importance, but it makes it clear that we are spending considerable sums of money to collect small sums of money from 50 per cent. of dog owners. We are spending roughly £4 million to collect less than £1 million. That is not an effective use of money and it is not an effective way to control the nuisance of dogs—and I have to say that for my wife's benefit because she does not like dogs. Here, surely, is a small matter that could have been dealt with in either of the last two Budgets, but it has not been. The licence could either have been abolished, or its cost could have been increased, and local authorities could have been given the revenue from the new, increased expenditure. I should like to see introduced a one-off dog licence of £ 100, which would make sense. The money would be paid to the local authority to ensure that there were proper dog control powers and organisations to make owners look after their dogs. Why has the Chancellor not taken up this matter and dealt with it?
We shall be reporting later on vehicle excise duty, which again the Chancellor has increased. The Public Accounts Committee has taken evidence showing that large numbers of people evade the duty. So we must find other ways of dealing with it.
Those are examples of the ways in which, I believe, the Public Accounts Committee is sometimes not effective in getting across the message that it ought to get across to the House and to Ministers. I do not think that Ministers pay sufficient attention to the Committee.
I come to the report which most Members are probably expecting me to deal with. I am grateful to my right hon. Friend the Member for Ashton-under-Lyne for concentrating his speech on what, in terms of the money which we on the Public Accounts Committee deal with, is a relatively unimportant matter. Quite rightly, because of the seriousness of what the report says and of the underlying principles involved, he made considerable play with it. I refer to the ninth report, the one on the sale of Hamilton college of education.
It is a damaging report. It is, as my right hon. Friend said, worded in the understated way in which the Public Accounts Committee usually drafts its reports. Unfortunately, the Government and, in particular, the Under-Secretary of State for Trade and Industry, the hon. Member for Edinburgh, Central (Mr. Fletcher), who was

the responsible Minister at the Scottish Office at that time, have used and, I think, deliberately misunderstood the way in which the Public Accounts Committee operates in order to evade their responsibility.
As I have done before on this matter, I declare something of an interest. Prior to coming to the House, I was employed in the college when it was a college of education. The hon. Member for Eastwood (Mr. Stewart) was on my side in the campaign which we fought for some time to keep the college open when the hon. Member for Edinburgh, Central was attempting to close it. I therefore admit that when looking at the report I had a certain bias, because I was concerned, not just about the cost and the cash lost but because I had a personal involvement in it. That personal involvement also meant that I knew what was involved in the assets of the college, which no other Member of the House knew. I include even my hon. Friend the Member for Hamilton (Mr. Robertson), whose campaign against the sale was totally justified by the Public Accounts Committee's report.
It was a disgrace to sell those assets. The main building contained more than 30 teaching rooms, a major hall with almost full theatre capacity, a 25m indoor heated swimming pool—which, by the way, had been completely renovated in the two years prior to my leaving the college—a games barn, two gymnasiums, art rooms and television studio facilities, as well as halls of residence for 650 students.
To sell those assets for £680,000 was a disgrace. In Northern Ireland—and I am glad to see that one Northern Ireland Member, the hon. Member for East Antrim (Mr. Beggs) is present—the estimate for building a nine-classroom primary school was £450,000. Yet a man is able to buy that building in Hamilton as a private school, with all the facilities that I have described, including playing fields, for £680,000.
It is quite clear from the report that this sale was bungled. Nobody has claimed, despite what hon. Members on the Government Benches said during a recent debate in the House, that we could have got £6 million for it. It must be pointed out, however, that the chief valuer said not that that was an ideal price or that it was the price that could be obtained in the most favourable circumstances but that that was the price that it ought to be possible to get in favourable circumstances. I admit that at present, under the economic regime of this Government, circumstances are not favourable for those who are attempting to buy that sort of property. Even so, if we look at the chapter of accidents—to which I will return later—that led to the sale, we see that the sale price ought to have been much better.
There was a failure to advertise properly. The report deals with that quite clearly. There was a failure to advertise in the proper papers. There was no attempt, as my right hon. Friend the Member for Ashton-under-Lyne said, to advertise in commercial estates papers, the Estates Times in particular. The property was advertised at the wrong time of the year—just before Christmas and just after the new year—and, as far as The Times is concerned, it was not even advertised on the day on which commercial property is usually advertised. It was tucked away among other advertisements, and anybody who wanted to buy commercial property would certainly not be looking for such advertisements on that day.
The Government failed to take the advice of the chief valuer. They failed to employ an estate agent. Also, they


employed the college solicitors, one of whose partners was a member of the board of governors. It should have been seen that there was a danger of a conflict of interest and those responsible should have steered well clear of employing that firm. There is no imputation that anything wrong took place, but it should not have been done like that. Public bodies have to make quite sure that there is no chance of that sort of thing hanging over them. The right people to sell the property were not employed.
Having got offers, having taken advice again from the chief valuer, after having ignored his advice in the first place, the Government again ignored it on the basis that it would cost money to readvertise the property. I cannot imagine any Member of the House who owns his own house and has to move out of it because he is changing his job who would advertise it for, say, £40,000 on this side and £150,000 or £200,000 on that side, not expecting to get that price.
In Scotland, of course, we often do not put in the advertisement what the price will be, as was done with the Hamilton college case. But if a property is advertised at £40,000 and somebody offers £4,000 for it, I cannot seriously believe that any hon. Member would accept that offer and not bother to put more advertisements in the papers, even though it was costing him money to maintain the property. Of course he would readvertise the property and, if necessary, go on readvertising it until he got an offer near to his price, even though it would mean losing money on maintenance of the property.
Knowing the Scottish college of education system very well, I do not put any of the blame for this sale on the Jordanhill board of governors. The blame rests entirely on the Scottish Education Department, because it controls the purse strings of the colleges of education in Scotland. Having seen them operating, I know that boards of governors in Scotland do very little without the agreement of the Scottish Education Department. They certainly did not sell the Hamilton college at that price, or even give advice to sell the college at that price, without the fullest consultation with the Scottish Education Department and without its consent.
One of the problems is that the PAC does not call Ministers before it. My right hon. Friend the Member for Ashton-under-Lyne stated that it is not the responsibility of the Committee to call Ministers before it. Therefore, it makes no attempt within its report to blame Ministers for any shortcomings. However, Hamilton college was not a small piece of property on the fringes of the Scottish Education Department's concern. It was not something about which there had been no debate. It was not a school which had been standing empty for two or three years and in which no one was very interested. It was not as though there had been no fight over its closure.
There had been a massive public campaign over two years to keep the college open. Very few Scottish Labour Members had not taken some part in the campaign and some of us had taken an extremely active part. The college fought against closure and so did the Church of Scotland and the Roman Catholic hierarchy in Scotland. It is almost impossible to find an organisation in Scotland that did not try to keep it open. Even some Conservative Members were not prepared to back the Minister during the campaign to keep the college open. The Minister who is now responsible for education in Scotland, the hon. Member for Eastwood, who replaced the then Minister with responsibility for education, the hon. Member for

Edinburgh, Central, campaigned to keep the college open because many of his constituents attended it and trained as teachers within it. I pay tribute to him for the part which he played in the campaign. It was a high-profile campaign and a great deal of publicity attached to it. I refuse to believe that in those circumstances the then Minister played no part when the college was closed and transferred to Jordanhill.

Mr. Maclennan: The hon. Gentleman is making a powerful argument in support of the thesis that ministerial involvement contributed to the appalling mess surrounding Hamilton college. The officials who sought to defend what had been done before the Committee indulged in arguments that were pure casuistry in seeking to distinguish between Hamilton college and the case already covered by the rules set out in the Halliday report. They argued that the Hamilton college case was not covered because the college was, for certain reasons, a peculiar property and, although publicly owned, was administered by the college. Is that weakness of argument by the officials not indicative that there was something more to the Hamilton college issue than that which met the eye?

Mr. Maxton: I entirely agree with the hon. Gentleman. I think that there was an attempt to advance that argument, which was entirely unreal. The Treasury response to the PAC's report, which is the response of the Scottish Office, has destroyed that argument. That response is to accept the Halliday report on the sale of all public property and not only that which is deemed to be Crown property. Although I was one of those who questioned the officials as hard as I could—the civil servants who appeared before us and represented the Scottish Education Department—I felt rather sorry for them. They were trying to defend the indefensible. They were having to try to defend decisions which I do not think were theirs. I do not think that they would have recommended them to the Minister in the first place. They were having to defend the Minister without naming him and without his being made accountable.
The Minister was responsible for reasons beyond the strict legal approach, although even that responsibility appears to be denied by the Government. I am certain that it was the Minister who said, "Sell. Get rid of the college as quickly as possible as it is nothing more than an embarrassment to me. For as long as the building stands empty in the middle of Hamilton, the people of Lanarkshire will be aware that their college of education has been destroyed. For as long as it remains, it will be a monument to the campaign that they fought. Get rid of it as quickly as possible."
When the offer came from Christian schools, a private school, I believe that the Minister said, "That is marvellous. That is agreed. We can keep the college in the hands of the education sector. How embarrassing it will be for Labour Members who are fighting the closure to find that the college will be turned into a private school." I think that the Minister said, "Get rid of it. We can and out what we can get for the residencies in addition to the college itself."
Miller Homes Northern Limited put in an offer for the residencies, which it is to convert into flats. I am no builder, but the hon. Member for Banff and Buchan (Mr. McQuarrie) suggested that kitchens and bathroom suites worth about £15,000 and £ 10,000 respectively would be


put into the luxury flat conversions. I do not believe that. Each unit will cost Miller Homes about £4,000. That will be the cost of purchasing the original building. The renovation may cost £4,000, £5,000 or even £10,000, but the profit that Miller Homes will make as a return on its capital will be outrageous. It is disgraceful that the taxpayers' money should be used to allow a private company such as Miller Homes to make that sort of profit.
I am not opposed to private companies building houses and I am not opposed to them making a profit on those houses. However, when that profit is made at the taxpayers' expense, I do not think that it should be tolerated.
It is my view that the Minister, the hon. Member for Edinburgh, Central, was closely involved, and that involvement raises a major constitutional issue. A week ago today I asked the Prime Minister how it was that the then Minister, the Minister in charge of the sale and who carried out the sale for a price that was 10 per cent. of the valuation, could remain a member of the Government. The Prime Minister replied to the effect that she had read the PAC report and could find no personal condemnation of the Under-Secretary of State. She added that she deeply resented what I had said and that she saw no reason to condemn the hon. Gentleman.
My right hon. Friend the Member for Ashton-under-Lyne has made it clear that in PAC reports we do not condemn Ministers. He will appreciate that I asked him to clarify that issue. In trying to evade her responsibilities on behalf of the Minister by saying that no personal condemnation appeared in the report, the Prime Minister was either deliberately evading the issue or trying deliberately to cover up for a Minister who, at best, has been incompetent and, at worst, was deliberately acting against the public interest. Alternatively, the Prime Minister is so ignorant of the way in which the PAC and the House operate that she is not worthy to be a Member of this place or to lead the Government.
The then Under-Secretary of State for Scotland, the hon. Member for Edinburgh, Central, presided over the sale. Even if I were prepared to say that he had no personal involvement, that it was a Civil Service decision and that civil servants made the mistake, have we now reached the stage when there is no ministerial reponsibility for the actions of the Civil Service? Can there be such blunderings and mistakes without their leading to the resignation of a Minister? It is incredible that we have reached that point. Even now, it is not too late for the Prime Minister to take the opportunity to get rid of the Minister who bungled the matter and who, in my view, has been deliberately involved in the whole episode.
This is not the first time that the Minister has been involved in the closure and sale of public assets. My hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), in a recent Adjournment debate, pointed out the Minister's involvement in Stonefield Trucks, which is mentioned in one of the PAC reports. The report makes it clear that Stonefield Trucks was sold at an under-valuation to Gomba Trucks, as it became known. The hon. Member for Eastwood is puckering his eyebrows, but he replied to the debate in which he was asked a number of questions which he has not yet answered. I hope that he will be able to give the Minister something with which to reply later.
I raise the issue of Stonefield Trucks briefly to make a comparison in two ways. First, the same Minister is involved in a bungling mistake. Secondly, there is a comparison to be made, such as the Scots make, concerning the sums of money involved in keeping employment in Ayrshire and keeping what was an interesting vehicle development alive and thriving, which could have resulted in orders, because orders were in the pipeline when the company was eventually closed. The comparison is between those sums of money and the sums of money that were poured into De Lorean Cars which the PAC has recently examined.
One has to ask why Northern Ireland seemed able to get money to keep De Lorean alive when, in Scotland, Stonefield Trucks was not able to get a similar sum of money. The answer to the question is very worrying, because it appears to be that violence succeeds and that, if there were no violence in Northern Ireland, the country would not receive the sums of money that it does in the way that it does. I hope that that is not the answer we will be given by the Government, on the principle that, if one makes enough noise and creates violence, one is offered more money than one would otherwise get.
There are many other points in the reports on which I should like to comment. There is a report on the cost of prescribing drugs in the National Health Service. When I compare the profitability of the drug companies, as set out in the report, with the sums of money poured into other parts of the National Health Service, it makes me sad that the pockets of the drug companies should be so lined by the exploitation of people's illnesses. The profit margin is 25 per cent.——

Mr. Willie W. Hamilton: Much more than that.

Mr. Maxton: My hon. Friend says that it is much more than that. In the Health Service, 25 per cent. profit is allowed, but, as he knows, because he was a member of the Committee at the time of this inquiry, when the accounting officer at the DHSS was asked what happened if the companies went over the 25 per cent. allowable margin for profitability, he replied that there was a grey area. When asked what grey area was allowed before clawback was considered, he replied that it was 10 per cent. Ten per cent., therefore, is the grey area. In other words, one is really talking about profit margins of 35 per cent. I then asked about advertising and backing—because we all know that drug companies do a great deal of that—and the reply was, "In the cost of production, we allow for 10 per cent. to cover packaging and advertising." In other words, in the production of drugs that are prescribed to people, one is talking about costs of approximately 55 per cent. It is astonishing that such money is being spent on the production of drugs when the Government are trying to cut down on every other area of National Health Service expenditure and are refusing to consider the generic prescribing of drugs which could save so much money.
Many other reports could be mentioned, but the report on drugs companies illustrates the role of the Public Accounts Committee. It illustrates that this Committee, comprised of members of the whole House, is not afraid to make reports that criticise Governments, of whichever party they may be formed, and is prepared to say things which would not necessarily reflect the political philosophy of individual members of the Committee.
I wish that more hon. Members who are not members of the Committee would contribute to the debate. The number of hon. Members present in the Chamber has slowly increased since I began to speak, which I am sure has nothing to do with the fact that I am speaking but is due to the interest of hon. Members who are ready to address the House.

Mr. Peter Hordern: I agree with the hon. Member for Glasgow, Cathcart (Mr. Maxton) that it is a great pity that more hon. Members are not taking part in the debate. As the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said correctly when opening the debate, the House is discussing 46 reports of the Public Accounts Committee, and there is ample scope for any hon. Member to find a rich field in which to concentrate his remarks.
I join other hon. Members in congratulating the right hon. Member for Ashton-under-Lyne on the way in which he chairs the Committee. I have been fortunate to serve under a number of Chairmen over the years, and he is one of the better Chairmen, as was his predecessor Lord Barnett, of whom he spoke so warmly. I regret that Lord Barnett is no longer in the House, although not because I think he was a better Chairman than the right hon. Member for Ashton-under-Lyne. I regret that it was not my right hon. and hon. Friends who defeated Lord Barnett in the last election. His defeat arose because he was so candid in his opinions about his own Government that his own party would not reselect him in his constituency.

Mr. Robert Sheldon: rose——

Mr. Hordern: Was not that the position?

Mr. Sheldon: Lord Barnett is a dear friend of both of us, I know. His constituency was fragmented into dozens of small pieces and formed no basis for a new constituency.

Mr. Hordern: It might be said in that case that there were three or four constituencies which took the opportunity not to re-select Lord Barnett—but of course I accept the right hon. Gentleman's explanation.
This debate concerns a new organisation, the National Audit Office, which takes the place of the old Exchequer and Audit Department. The nature of the work of that Department has changed over the years. The Comptroller and Auditor General, when he gave evidence to the Committee about the work of his Department, reminded us that there was a time when two thirds of the work was concentrated on value-for-money exercises. Now, he said, he spends three quarters of his time on certification—certifying that money has been properly spent. That is a great pity. The proportions should be reversed, and more time and attention should be paid by the Comptroller and Auditor General and his Department to value-for-money exercises. There is certainly scope for them.
When he gave evidence, the Comptroller and Auditor General said that he hoped to be able to spend half his time on value-for-money and half on certification by 1987. I consider that that rate of progress is a little slow. I hope that he will think again, and that the House will think it proper to allow him to take on extra support if he needs it to carry out the value-for-money exercises that members of the Committee have found useful and will find increasingly useful in the future.
Some hon. Members will recall that members of the Committee were fortunate enough to visit the United States. So far as I can recall, that was the only expedition abroad that the Public Accounts Committee has ever made. It is not, alas, like some Select Committees, which seem to go abroad at the drop of a hat. In the United States, we investigated the work of the General Accounting office. We found that it had some 6,000 members of staff, of whom half were accountants, and that it concerned itself with value for money in all the departments of the federal Government and, indeed, wherever public money went. I am sure that that was the origin of the Bill brought in by my right hon. Friend the Member for Chelmsford (M r. St. John-Stevas) which brought the National Audit Office into the world. It is important that the National Audit Office should be more concerned with value-for-money exercises, if only because of the scope and the growth of public expenditure. When the right hon. Member for Ashton-under-Lyne and I came to the House in 1964, public expenditure was some 36 per cent. of gross domestic product. It is now 46 per cent., having reached 48 per cent. in 1976. We should not be satisfied that public expenditure should rise in that way unless we are sure not just that that money is being properly spent but that we are getting value for money. We have to judge the adequacy of existing mechanisms for ascertaining whether there is value for money.
When my right hon. Friend introduced his original Bills it was intended that the National Audit Office should be able to investigate the nationalised industries. There was a great deal of opposition to that from those industries. They felt that they already had the Departments crawling all over them, and, from time to time, the Monopolies and Mergers Commission. Now there was to be the National Audit Office as well. They refused, and because of shortage of time the House did not insist. Had we insisted, we might have lost the Bill.
We have to accept the consequences of that decision. The truth of the matter is that the nationalised industries have not been under proper surveillance 5y the Departments, and the Monopolies and Mergers Commission does not adequately fulfil the task that the Government have set for it. From time to time it presents admirable reports, but it is only at the invitation of the Government that it can examine a Department or a nationalised industry and issue a report. It cannot go in at any time and investigate what is going on, as the National Audit Office can.
Six or seven years ago, the Monopolies and Mergers Commission reported on the activities of the southern region of British Rail. It found that there was no point in having guards travelling on goods trains. There was nothing for them to do. I checked up recently and found that guards are still travelling on those goods trains. The commission also reported that only half of the working time of drivers was actually spent driving trains. Nothing has been done to put that right, either. If the National Audit Office was concerned with looking into the nationalised industries, as it should be, the Committee would receive regular reports about such matters and would be able to ask the Departments why they were not putting into effect the recommendations that had been made. At present, we cannot do so.
I take an example from the seventh report of 1983–84. When the Comptroller and Auditor General reported on the monitoring by the Departments sponsoring the British


Railways Board and the National Coal Board, he reported that all the Departments agreed that there should be corporate plans but that neither the British Rail Board nor the NCB had been able
to submit formal and fully worked up plans after November 1980 and January 1981 respectively.
They simply had not bothered to introduce corporate plans. I quote from paragraph 12 of our report:
The Department of Industry stated that they accepted that there had been deficiencies in the corporate plans produced by British Telecommunications (BT), and in its whole system of financial control … Notwithstanding the deficiencies, the Department confirmed that they regarded corporate planning as the central feature of their monitoring process.
It appears that although the Department said that BT had produced no corporate plan, it felt that it was important that a corporate plan should be produced. Paragraph 14 states:
In one specific instance the Department of Industry's monitoring arrangements had been unable to detect during 1981–82 that BT had failed to keep within conditions attaching to an increase in its EFL for that year. The Department explained that £33 million had been used by BT other than on capital expenditure for which an increase of £200 million in the EFL had been intended: they had taken this matter up with BT.
There was a lack of the tight control that we should be able to expect. Consequently, paragraph 19 states that
the Department of Industry did not consider it appropriate to seek information on individual projects in BT's planned capital expenditure of over £10 billion.
Ten billion pounds is an awful lot of money.
Finally, in paragraph 25, the Committee stated:
We observe that in 1981–82 there appears to have been considerable flexibility in the way the EFL system operated over all the nationalised industries. For that year the EFLs originally set totalled £2,390 million. Subsequently the limits for six of the industries (NCB, BNOC, British Gas, BT, Post Office and BRB) were increased by almost £1,000 million and the final external finance requirement totalled £3,254 million, an increase of 36 per cent.
That report was rather damning, and I awaited with some interest the Treasury's reply. In course of time, just this month, it appeared. I quote from paragraph 82:
The Treasury and departments do not agree with the Committee's conclusion that sponsor departments may have been unable to ensure that EFLs operate effectively to provide a firm discipline on management of the industries on an annual basis … EFLs have been and continue to be a salutory financial discipline, and an effective short term control".
Therefore, the Treasury did not think that there was anything wrong in not meeting EFLs, but £1 billion is not an inconsequential amount and to go so far wrong in a total of about £3 billion is quite a large mistake. If the Treasury—and, thereby, the Government—says in its reply that it does not think it worthwhile doing anything about it, who will? That draws me to the belief that a great deal more importance and responsibility now attaches to the National Audit Office.
Our fourth report of 1982–83 concerned special employment measures. Apparently they are to cost £2 billion in 1984–85. We reported that no proper comparisons were being made on alternative methods of providing employment. For example, nothing was being done to compare whether a reduction in the burden of taxation might have achieved better results. It has all been done by extremely subjective judgments. The net cost of the young workers scheme was £5,355 per person. By any standards, that is a great deal of money. It is certainly a

great deal of money when one considers that no proper assessment was made before the money was spent. The Treasury report refers to that as well. It says:
The Treasury and the Department of Employment accept the need to compare the cost effectiveness of SEMs with one another … However, as the report has noted, valid comparisons are difficult where specific objectives differ".
I believe that the truth is that the scheme was the brainchild of my right hon. Friend the Prime Minister's personal economic adviser, Mr. Alan Walters, who felt that it was a good plan to get young people back into employment. That was a worthy enough objective. However, I do not believe that it matters how dignified such a source might be; it is still important that such methods be tried and tested before being put into practice at such enormous expense. We should remember that £2 billion is spent on such special schemes each year. I accept the youth training scheme, which costs £1 billion a year and serves a different purpose and, if I may say so, a very good one. However, this is another example of the lack of professionalism to be found throughout the Departments in these important matters. They just adopt a scheme and carry on with it, no matter what the criticism, and when they are criticised they try to find some half-baked reason to justify their action.
In our ninth report of 1981–82 we discovered the Chevaline project. Although the project had been going for many years it was first reported to the House in January 1980, when we were told that it had already cost £1 billion. In July 1981, Sir John Non, as he now is, said that the cost of Chevaline had gone bananas. In retrospect that was a happier expression to use in those days than it is today. Even so, how can we be confident that others of these great defence expenditures are not going exactly the same way? There are now 20 projects that cost more than £500 million and another 20 are costing more than £200 million. When they come before us they are not exactly flush with detail. We get merely a two-word description of the object—it might be radios—and some millions of pounds are attached to the figure. There is no way in which to decide on the practical effects of the weapons. I hope that they frighten the Russians as much as they frighten me. We remain to be satisfied that these great weapons of destruction have been properly evaluated with each other and with our NATO allies to ensure that our defence expenditure is as good and effective as it can be. I am not criticising the amount of money that we spend on defence. Like all of my right hon. and hon. Friends I favour it, but I question whether the money is being spent to the best purpose in conjunction with our allies. We should examine that matter further.
In our sixth report of 1981–82 we have a review by the Civil Service Department. It was a further analysis of the 1977 and 1978 staff returns. There used then to be a three-year inspection cycle of all of the departments in the Civil Service to see what they were doing. It was discovered that when the Civil Service's inspectors had taken part in the departmental inspections they found that they were able to recommend savings more than double those recommended by the inspectors in the department. I recollect a little gem in our original report, to the effect that, at the current rate of progress with staff inspection in the DHSS, it would take between seven and 28 years to get round once. That statistic stuck in my mind. I was therefore interested to see what had happened since. There are now many fewer staff inspectors. The technique has changed, as it is no longer thought necessary to look at all of the departments'


operations. I entirely understand that it will do to take samples but it is interesting that, when there is criticism that it is hard for departments to meet, they merely change their method of operation to avoid the criticism being made in the future. I regard that as a rather peculiar form of progress.
I should like to deal briefly with the sale of assets, which is touched on in one of our reports. I know that my hon. Friend the Financial Secretary is interested in this matter. The price obtained does not concern me and I think that the House well understands that these matters are by no means easy to judge. My point is that when the assets of nationalised industries are sold, a pension fund is always attached to that nationalised industry and the pension fund is always index-linked and funded. When the National Freight Corporation was denationalised recently, we were told that the receipts from the sale amounted to some £50 million. I understand that the net receipts were not £50 million but £4 million because £46 million had been taken up in paying off the deficit of the pension fund. That is only the beginning of the problem. I have often said that the commitment to a funded index-linked scheme will cost an unconscionable amount of money. I envisage the problem cropping up again with British Airways and any other nationalised industry that is sold. My solution is that the people who are in receipt of an index-linked pension that is guaranteed should be paid, as is the case in the Civil Service, on a pay-as-you-go basis. That would be much cheaper for the Government and it would save a great deal of money. I see the hon. Member for Stoke-on-Trent, Central (Mr. Fisher) shaking his head and I should like to know why.

Mr. Mark Fisher: If I catch your eye, Mr. Deputy Speaker, I should like to elaborate at some length on some of what the hon. Gentleman has said.

Mr. Hordern: I may not be in the Chamber when the hon. Gentleman makes his speech. That is why I wanted him to reply now. I have made my point and I hope that my hon. Friend will mark it.
In defence, industry or employment, the evidence is that existing methods of control are, alas, insufficient. If cuts are demanded, they are found first, all too often, in research and capital investment. There is little appraisal of existing expenditure within individual Departments and still less between one Department and another. No weight is attached to one form of expenditure compared with another within a Department or between Departments. When it comes to the crunch of the public expenditure round, which happens every year, all those forms of expenditure are doggedly defended by their Ministers as though each one were sacrosanct, although some were dreamt up many years ago and have long since ceased to fulfil the purposes for which they were founded.
My hon. Friend and his colleagues at the Treasury do not have the resources to deal with the matter. It needs a much longer-term survey than they can apply, because they are so overworked in dealing with the whole of public expenditure. I wish that I could see the solution. I do not like to think of recommending that the Treasury should expand, but, failing that, a heavy responsibility falls upon the National Audit Office to carry out those types of surveys and value-for-money exercises. Ultimately those reports will be made available to the House. Although we

may apply pressure and ask questions of the Executive about how it is proceeding with value-for-money exercises, ultimately it must be the Executive's role to ensure that the country and the House receive value for money.

Mr. George Park: I have had the privilege of serving under both Lord Barnett and the present Chairman of the Committee, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who have different styles. They are both effective in asking the searching questions that are essential at hearings of the Public Accounts Committee. Under both Chairmen, as has been said, the Committee has had the benefit of the excellent reports from the Comptroller and Auditor General and his staff. The thread running through those reports is that we still have a long way to go before we can be satisfied that taxpayers' money is used to the best effect.
Hon. Members stressed the politeness of the Committee. Sometimes, when I hear long and opaque replies to questions put by the Committee, I get a Little impatient. I do not suggest that witnesses are trying to evade the questions, but sometimes I feel that in those instances it is possible that a more abrasive approach might achieve more positive responses.
The reports, which hon. Members have highlighted, show that the Committee must repeatedly return to major areas, such as size and the money involved in projects. In his excellent speech, my right hon. Friend the Member for Ashton-under-Lyne instanced from the Committee's twenty-second report the fact that the best course in dealing with tax evasion could be to engage more civil servants to ensure that more people meet their tax responsibilities and bring more revenue into the Treasury. My right hon. Friend did not continue, as is his habit, to draw the obvious inference that greater efficiency is not always achieved by reducing the Civil Service.
In examining aspects of, for example, the Ministry of Defence—the hon. Member for Horsham (Mr. Hordern) referred to this point—the Committee often runs up against the needs of national security. Those needs preclude me from going too far in giving instances even in this debate. Although I accept that weapons development frequently takes us to the frontiers of knowledge, we must still devise a more effective method of preventing and controlling massive overshooting of original estimates.
On several occasions in the debate the DHSS has been instanced, and I believe that will be repeated. In its seventeenth report, the Committee dealt with the costs of remedying defects in hospitals. It was evident that the lessons of initial errors have not been learnt and applied more recently. The irony was that, in the fourteenth report, attention was drawn to the fact that the consultants who had made the original errors were being paid an extra set of fees to correct their errors. In another report, the Committee dealt with the DHSS devolving responsibility to the regional health authorities. The guidelines were not sufficiently clearly laid down. There was the spectacle of officers being made redundant, given compensatory payments in one week, re-engaged the' week after and retaining those compensatory payments. That is not good enough.
The Committee's eleventh report dealt with the Department of Education and Science and the University Grants Committee. My impression was that the UGC was not sufficiently accountable for the very large sums of money handed over to it. I concede that, as a non-university type, I am probably biased. Since the majority of hon. Members have gone through the university mill, they sympathise with and understand one another and are prepared to make concessions they would not make to me. In considering the use of money, especially other people's money, I do not differentiate between academics and the lumpen proletariat. They are all liable to get their fingers caught in the till.
It is clear that the Committee's work will not diminish, although the stamina of hon. Members on the Committee might, because we face fearsome paperwork in some of our studies. Sometimes I wonder how we get through all the paper to ask coherent and relevant questions of the witnesses we invite. Somehow we manage it. It is essential that, when taxpayers' money is being spent, the PAC should be allowed to ascertain whether it is being used to the best effect. No obstacle should be placed in the Committee's way in achieving that aim.

Mr. Michael Latham: It is a pleasure to follow the hon. Member for Coventry, North-East (Mr. Park). I was especially glad that he began by saying that Committee members need to be abrasive in these matters. I remember, as I as sure does the hon. Gentleman, that during recent questioning the hon. Gentleman lost patience with an especially turgid witness and turned on him with considerable effect. That is an example of where the hon. Gentleman's approach effectively came into play.
Each hon. Member who has spoken in the debate, especially the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), the Committee's excellent Chairman, talked about the Committee's dual role. That must remain the focus of hon. Members' attention. Above all, there is need to get value for money in public spending. I agree with the hon. Member for Normanton (Mr. O'Brien) that, when considering the activities of the DHSS—they have been regularly considered by the Committee—we must remember that the object of the exercise is not to administer for the sake of administering, but to ensure that money goes to patient care. It should not be wasted on poor procedures, overspending or, as the hon. Member for Glasgow, Cathcart (Mr. Maxton) said, on excessive payments to pharmaceutical companies. The basis of it all, therefore, is ensuring value for money, which means seeing that money is spent properly on patient care, which is what the taxpayers demand.
But there is a second role of the Committee, of which we have heard less today, although it was stressed by the right hon. Member for Ashton-under-Lyne. That is the need—a need which goes back to Gladstone—to scrutinise payments to ensure that they are proper and made without irregularity. Unfortunately, it is still necessary for the Committee to continue that role. It is no secret to anybody sitting in the public proceedings of the Committee or reading the newspapers that, on De Lorean and Wardale, the Committee has had to return to the more historic role of looking at irregularities.
My hon. Friend the Member for Scarborough (Sir M. Shaw) spoke of what happened when reports were brought before the House. I have no idea what the Committee will say about De Lorean or Wardale, but when those reports are made, they must not be allowed to sit on the table for two years in the way that some of the reports that we are discussing today have. We shall expect them to be discussed by the House, without delay, at length and with full explanations of why things went wrong. I hope that the Minister will bear that in mind when the Committee has reported and the Treasury has produced its minute in reply.
There are three matters to which I particularly wish to draw the attention of the House, the first being the question of the Comptroller and Auditor General's department, the National Audit Office. It must be clear to anybody listening to the debate that the C and AG has an absolutely vital role to play in our proceedings.
Having come to this Committee new in this Parliament, after nine years on other Select Committees, to me the difference between the PAC and other Select Committees is obvious. We in the PAC are lucky in that, while other Select Committees have excellent specialist advisers, the PAC, in effect, has a whole department behind it which can do the in-depth research and investigation that is not available to other Select Committees. Thus, it must be properly staffed.
I appreciate that this issue has gone before the new House of Commons Commission, but certain matters should be before the House. First, the C and AG is proposing an increase in staff. When he gave evidence on 7 November 1983, I asked him:
You must be the only department of Government which is expecting a 5 per cent. addition in staff numbers this year and more the year after and more the year after that, except possibly the Ministry of Defence.
It does not come easily to me to advocate increasing staff, but for the C and AG's Department there is an overwhelming case for it, and I am glad that apparently that has been accepted.
However, a less satisfactory side of the matter is that of salary scales—not I hasten to say, of the C and AG's Department but of some of the competing organisations. The Committee was not entirely happy with what it heard about some matters relating to the new Audit Commission; this is gone into at length in the eighth report. I hope that there will be no question of a merry-go-round of competition. While we want public officials to be properly paid, we do not want the Audit Commission and the C and AG's department competing against each other for the same scarce resources, with salaries being forced up as a result. That would be detrimental not only to staff morale but to the effective job of the PAC. I hope that the Ministers and others with responsibility for wider staffing considerations will keep a careful watch on that.
The right hon. Member for Ashton-under-Lyne stressed the need for a bipartisan approach in the Committee to the question of Hamilton, and the hon. Member for Glasgow, Cathcart (Mr. Maxton) pointed out in his lengthy speech that that was all very well in Committee but that, once the issues were being debated on the Floor of the House, he would feel entitled to make any points he wished, and I am sure that we all accept that. We are well aware that Hamilton is a highly political issue in Scotland and that there has already been a debate in the House on the matter.
While the whole affair was, in my view, poorly handled by the Government at the time, the Committee's views, and some of the questions and answers, should not necessarily have led to some of the statements that have been made or to some of the tone that has been adopted. In question 468 I asked Mr. Gilchrist, the valuation officer for the Inland Revenue:
Do you think that the property was sold on 1 and 8 November at a fair market price?
He replied:
We would have preferred the market to have been more tested.
I then said:
I am not sure that I know what that answer means: does it mean yes, or does it mean no?
He replied:
I can neither answer yes or no to it. The fact is that specialised buildings are notoriously difficult to sell. The market for them is unpredictable and erratic. The best that one can do is to advertise as widely as possible and make sure that every single avenue has been explored.
I must say, in fairness to Scottish Ministers, that the point was taken in the Treasury minute, which said:
The department accepts that there are lessons to be learned from the sale of Hamilton College. Scottish Office departments have already been reminded of the existing guidance and in accordance with the Committee's recommendation full revised guidance will shortly be issued throughout the Scottish Office on the procedure to be followed".
The Treasury minute said:
the department accepts that it should have attempted to reconcile the views of the Governing Body and the advice of the Chief Valuer that estate agents should be appointed before finally approving the appointment of the selling agents.
It should be stressed, therefore, that the PAC did not say in terms that the building had been undersold—there was no evidence to that effect—and in paragraph 25 we said:
There can, of course, be no certainty what price would have been obtained for Hamilton College if SED had sought to have its sale handled in accordance with the Chief Valuer's and Solicitor's Office advice.
We criticised the procedures—rightly, in my view, because they were poorly handled—and those points have been met in the Treasury minute. My personal view as a member of the Committee is that that has been satisfactorily resolved as a result of the Committee's investigations.
A report which has not been referred to today—I was not involved in the questioning, although, as it has been approved in this Parliament, I was involved, as were all hon. Members, with it—is the fifth report of this Session on economy measures in the civil, defence and overseas estates. The report makes good reading, and I see the right hon. Member for Ashton-under-Lyne smiling at that remark.
I shall refresh the memory of the House on two delightful exchanges about embassies. An excellent exchange involved the hon. Member for Cathcart when he asked Sir Antony Acland, the top mandarin responsible for those matters at the Foreign Office:
Would you not agree that the Austro-Hungarian Empire disappeared in 1918?
Sir Antony replied:
Yes.
The second delightful exchange occurred when the hon.
Member for Coventry, North-East said:
Let me be quite honest; you could number the embassies that I have seen on less than the fingers of one hand.
The Chairman, Lord Barnett, commented:
You are likely to see even fewer now.

This report must be handled with some care because the impression which tends to be given is that envious hon. Members are sitting around complaining about the way in which mandarins live in luxury in large houses, in a style long since passed, in a lavish style of personal accommodation which appears to have outlived its time. We refer to that in paragraph 31. There is considerable force in those criticisms.
Equally, one may fairly ask whether there is some difference of opinion between the Treasury and the FCO on the matter. Paragraph 54 of the Treasury minute said:
It is the view of FCO Ministers that there should be more flexibility in the guidelines and their application, and this subject will be discussed with the Treasury. The FCO accepts that space standards for residential accommodation are an essential tool of estate management.
We know what the Foreign Office thinks, but not what the Treasury thinks, still less whether they agree. The PAC will probably be looking for clear indications—to be fair, there are some in the Treasury minute—that the Foreign Office realises that properties must have some relation to the modern style of diplomacy and to public expenditure problems in this country.

Mr. Eric Cockeram: I am grateful to my hon. Friend for giving way. Does he accept that the Government's reply to the comments on accommodation overseas for FCO staff was probably a less ready acceptance of the PAC's recommendations than any report that we have submitted?

Mr. Latham: That is a fair comment. I stress that the report from the Treasury minute appeared to emphasise the view of the Foreign Office, suggesting that Ministers are not a seamless robe on this matter. The Treasury's view is usually given to the PAC on behalf of the Government as a whole.
I hope that it will be clearly understood that the Committee understands that diplomats overseas have a very difficult job, sometimes in unsatisfactory physical conditions and unpleasant climates. They may be in physical danger, and some of them have been kidnapped. Alas, some have even been murdered. No one in the House is under an illusion about the difficulties and importance of the job of a diplomat. Equally, we realise that questions of national prestige may be involved at a particular embassy site. I hope that we shall ensure, if we return to this matter and if there is continual monitoring by the Comptroller and Auditor General, a clear balance in Government thinking between a reasonable position for Britain and her embassies, and maintaining economy in public accommodation, which is a fair balance to obtain.
I aimed to be the briefest speaker in the debate and I expect that I shall succeed in that. What has become clear to me, in the nine months that I have served on the PAC, apart from the great amount of work done by the right hon. Member for Ashton-under-Lyne, is that the Committee is a very real weapon in this House. It is not true that it is all "Yes, Minister" and that anybody can get away with whatever he wants. I should not have liked to be some of the public officials being grilled by the PAC at a public hearing, as they must have had an unpleasant time. If the Committee continues to do its job in that way and report to the House as a whole, it will be doing good for the taxpayers.

Mr. Willie W. Hamilton: I am the only non-member of the Public Accounts Committee who has taken part in the debate so far, perhaps because hon. Members are fairly thin on the ground.
I served on the PAC for a few years, until the 1983 general election. The debate gives me an opportunity to pay tribute to the hon. Member for Horsham (Mr. Hordern), who I found during my short experience of the PAC to be very assiduous and perceptive. He was not averse to putting his party political points in the nicest possible way. He was a man after my own heart in that respect, except that I do not always make such points in the nicest possible way.
The hon. Gentleman said that it is important to ensure value for money rather than carry out the certification procedure, although that is important. The money involved in whatever area we engage ourselves in is so great and the opportunity for waste so frightening that we cannot but admire machinery invented by the House or the Government to ensure that such waste is reduced to a minimum. I hope to return to that matter later.
I recall, as the hon. Member for Horsham may recall, that he referred to a defence contract involving thousands of millions of pounds of taxpayers' money. The Committee dealt at one stage with the profits of contractors. The Chairman, Mr. Joel Barnett, as he then was, asked Sir Frank Cooper, who was then the permanent secretary at the Ministry of Defence, whether any of those defence contractors had gone into liquidation in the current Session. Sir Frank smiled his quizzical smile and replied, "Not to my knowledge."
It is clear that there are enormous rip-offs of the Ministry of Defence, no less than of the Department of Health and Social Security in relation to pharmaceutical firms. We have had ample evidence in front of us about the pharmaceutical firms, although some of it was erased from the report for good, sound commercial reasons—or so the DHSS and the pharmaceutical firms considered. The profits were enormous. The defence contractors are doing it, too, because of our desperate need to protect ourselves from the Russians. I hope that the Russians are as frightened of that defence expenditure as we are. The Public Accounts Committee cannot find such evidence. Indeed, it gets a minimum of information about how decisions are reached in favour of one weapon rather than another.
The Committee took evidence on the Sting Ray torpedo. We discovered that the Americans were producing a weapon that we thought seemed to do the job equally well but at half the cost. We decided, for good, jingoistic and nationalistic reasons, to take the British weapon. When I started to criticise Sting Ray, I was subjected to fairly gentle abuse by Marconi, at Hillend in Fife, reminding me that my constituents, who elected me, had votes. If I did anything to destroy Marconi's work on Sting Ray, so be it, but I had better watch out. Such pressure can be brought to bear on hon. Members when they criticise, quite properly, the wisdom or lack of wisdom of public expenditure.
I regret that the debate is so poorly attended. It makes absurd our claim to be guardians of the public purse when almost all aspects of government are scrutinised by 20 hon. Members out of more than 600. The advertisement for these debates might be improved if we were to put on the

Whip that we would talk about nuclear weapons, drug companies' profits or defence contract profits. If that were done, we would sell these debates to the public and to the House. When an hon. Member who is not on the PAC discovers that there is to be a short debate on 46 reports from that Committee, what conceivable interest could there be for him?
The debate is bound to be disjointed because each hon. Member has his own hobby horse or horses. Inevitably that calls into question the way in which we organise our parliamentary year. There should be a Select Committee to consider the way in which we organise our procedure. If more reports from Select Committees, not just the PAC, were published and debated on the Floor of the House as a result of the House sitting for, say, four more weeks each Session, there is bound to be public interest in the work of the Committees and how the Government work and how public money is spent. I hope that that point will be taken on board by the Minister.
I should like to say on a personal note that I served on the Public Accounts Committee for a short time, but I came off it on the ground that I found the work too heavy. We sat for two afternoons a week for two or three hours. The reading involved was demanding, so I gave it up. However, I am now sorely tempted to try to get back on the Committee, as there is a lot of muck to be raked, and I want to rake it. I hope that the Minister is taking what I am saying in good part. I think that he understands the message that I am trying to convey.
I shall devote my remarks to two or three reports. The first is the twenty-second report on the black economy, from the Session 1981–82. I served on the Committee that produced that report. The next report to which I shall refer is the second report for the Session 1983–84 entitled "Prevention and detection of evasion of National Insurance contributions and of fraud and abuse relating to Social Security benefits".
The 1983–84 report describes how in 1980 the Department of Health and Social Security was to allocate an extra 1,050 specialist staff to control and reduce, if they could, social security fraud and abuse. That additional 1,050 staff brought the total number of staff to 5,600, of whom 2,370 were directly involved in anti-fraud activities in local offices and in regional special investigation teams.
We said in the report that the Department of Employment employed at that time the equivalent of 653 full-time officers to detect possible fraudulent claims for unemployment benefit. Therefore, within those two Government Departments, about 6,000 people were engaged on checking fraud and abuse. No one objects to the detection of fraud and abuse wherever they occur in the expenditure of public money.
Paragraph 20 of the report deals with the cost-effectiveness of the employment of such staff. The Department of Health and Social Security estimated that in two years the 2,300 anti-fraud staff had saved about £164 million through terminating suspected fraudulent claims, and that £388 million altogether had been saved. The estimated savings per man employed ranged from £26,000 for local office staff to £90,000 for staff controlling special cases. Those are significant savings which cannot be ignored.
However, I shall compare those figures with the figures given in the twenty-second report of 1981–82 on the black economy. There is a great discrepancy between the cost benefit analysis within the Department of Health and


Social Security and that of the Inland Revenue. The tax loss in the black economy was estimated at £4 billion a year. That figure was given a year or two ago. As far as I know, no information is available for the present figure, but I guess that it is probably considerably more. What is being done about that? Paragraph 14 states:
the Treasury said in evidence that they might refuse to allow extra staff for an area of high yield if this conflicted with constraints on the size of the Civil Service".
In other words, the Treasury was saying, "No matter how beneficial it might be to the Revenue to employ extra staff, it is important for us politically to be seen to be reducing the number of civil servants." There is evidence that there is a substantial gain to be had from employing investigatory staff within the Inland Revenue, but the Treasury believes that it is more important to be seen to be reducing the number of staff than increasing its cost-effectiveness. Figures are given by the Treasury in paragraph 15:
Yields in the Inland Revenue in 1981 were:
£100 million extra revenue from 1,300 staff engaged on selective examination of taxpayers' accounts".
If one reduces that to unitary figures, it means that for every extra 13 staff employed an extra £1 million was gained in revenue. The Treasury states further that the yields were
£29 million from special investigations by less than 80 staff at Special Offices".
For every two or three extra staff employed, an extra £1 million was gained in revenue. The Treasury states that there was a yield of
£23 million from 100 staff in Enquiry Branch".
That works out at about £1 million of extra revenue for every four extra staff employed. There is a yield of
£20 million from 390 PAYE audit staff.
In other words, £1 million of extra revenue is gained from the employment of an extra 19 staff. The report states in paragraph 18:
The expectation that additional staff would save more revenue than their own cost was not of itself a sufficient criterion for this.
In effect, the Treasury is saying that it is interested not in the cost-effectiveness of employing extra staff, but in reducing the overall number of staff. However, if one looks at appendix I of the report, one sees that the return is considerable. When I was refreshing my memory on these matters, I discovered that Sir Lawrence Airey, the chairman of the Board of Inland Revenue, said in answer to question 2370 that the savings ratio
is at the top end of the range. It is now up to 19 to 1.
In other words, for every £1,000 in salary to a member of the investigatory staff, one gets £19,000 back. It is much more cost-effective to employ staff in that area than to employ them in investigations for the Department of Health and Social Security, although both are important.
The Government can be criticised for being more energetic and enthusiastic about chasing DHSS fraud and other abuses, which primarily involve relatively poor people, than about employing extra staff to chase the people taking part in the black economy who generally—it is not always true—are better heeled and more prosperous. If the Chancellor of the Exchequer wants to reduce taxation during his term of office, as he says he does, and to get the best value for money, he should study carefully the desirability of switching investigatory staff from the DHSs to the much more fertile black economy.
Similar considerations apply to the supply of drugs to the National Health Service. My hon. Friend the Member

for Glasgow, Cathcart (Mr. Maxton) and other hon. Members referred to that matter, and it was referred to in the tenth report during the 1982–83 Session. Evidence was given, which was deleted from the report, of the enormous and unjustified profits made by the pharmaceutical companies. Far greater savings can be found there than by messing about yet again with administrative structures within the Health Service or by increasing charges to patients.
There is enormous potential for public expenditure savings in defence, the Health Service and the black economy and I hope that the Government will address themselves to that with great enthusiasm. If they do, they will receive almost unanimous support from the Opposition.

Mr. Eric Cockeram: I commence my brief contribution by paying tribute to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who chairs our Committee with great courtesy and attention to detail. I do not know how he handles all the necessary reading and paperwork. He is an effective and popular Chairman, and has had an opportunity to make a significant contribution to Parliament.
Two matters are now taking place of which the House is aware. First, on 1 January 1984 the National Audit Office was set up and, secondly, greater attention is given to value-for-money audits. The shift of emphasis in the Committee will ensure that Parliament gets even better value from the Public Accounts Committee than has been the case previously.
There are 47 reports, but I shall speak about the sixth report from the current Session, 1983–84. The Committee examined the construction and management of factories by the English Industrial Estates Corporation, the Scottish Development Agency and the Highlands and Islands Development Board, and placed particular emphasis on the English Industrial Estates Corporation.
The report reveals that the factories already constructed by that body have a historic cost less depreciation of about £700 million. However, as the historic cost factor must take into account that these factories have been built over a number of decades and that depreciation has been provided for, the true cost is between £1 billion and £2 billion. That is an under-estimate, because the accounts of the English Industrial Estates Corporation do not take into consideration any interest on capital, which they would do if the factories were developed privately. The true cost is still greater.
Last year when the report was published the Committee was told that a further £474 million was to be spent—that was at 1983 prices and, therefore, it is clearly more than £500 million at today's prices. That exercise continues unabated. What is the return on that? The report records concisely that the return is £25·5 million, which is a small return, of about 2 per cent.
If one looks further, one finds that the £25 million worth of rental income is absorbed, as in all good bureaucracies, by considerable administrative expense, which is neatly pitched at £24 million, thereby leaving a profit of El million. That is a fine exercise in accountancy. In true television terms a mandarin can go to the Minister and say "Yes, Minister, but we are making a profit," and so they are, but the profit is £1 million from an estate valued at many billions. The figures are distorted because they do


not take account of the interest on capital costs. Instead of a £1 million surplus, as shown in the accounts, there is a substantial loss.
The report states that the English Industrial Estates Corporation builds factories only where the private sector is not building them. It is not surprising when losses on such a scale are financed by taxpayers that the private sector does not step in to build factories.
What steps does the English Industrial Estates Corporation take? It records that 23 per cent. of its factories are vacant, so it steps up its publicity campaign. Again the report shows that the cost of publicity for the English Industrial Estates Corporation has multiplied by 50 during the four years covered in the report. Although there has been inflation—happily, it is now only 5 per cent.—a factor of 50 is an extraordinary increase. The corporation is working jolly hard to cover up the fact that 23 per cent. of its factories are vacant, yet it continues to build to the tune of £500 million a year.
The House will recall that one of the Government's policies is to get rid of state landlordism. We have fought two general elections in the past five years. One feature of our manifestos has been the sale of council houses because the Government believe that the state should not be a landlord. Yet in this case the Department of Trade and Industry works hard to get into state landlordism as fast as it can, regardless of the costs of, and the loss incurred by, building the factories, and of the fact that the private sector cannot compete against a state corporation which makes a loss on such a scale. If that is so, somebody somewhere should step back and query the logic of it. I hope that the Minister will attempt to do so tonight.

Mr. Mark Fisher: I am the first hon. Member to speak in the debate who is neither a current nor a past member of the Public Accounts Committee, and I rise in some trepidation. As my hon. Friend the Member for Fife, Central (Mr. Hamilton) said, the size and display of the Committee's reports was daunting for someone who was not a member of the Committee and even, possibly, for the Financial Secretary.
Having studied some of the reports and noted the degree of scrutiny and interest that they show, I found the prospect of speaking in the debate even more off-putting. I came to the debate to listen and learn. I was rapt by the speech of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and, having been held by him, I was drawn further into the debate by the excellent and pugnacious contribution of my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), and then by the extremely interesting and wide-ranging speech by the hon. Member for Horsham (Mr. Hordern). I am sad to see that he is not in his place although he has been here almost throughout the entire debate. The quality of those speeches drew me into the issue.
I should like to comment on the tenth report of the PAC on the Department of Industry—"Sale of shares in British Aerospace; Sales of Government Shareholdings in other publicly owned Companies and in British Petroleum Ltd." I was a member of the Telecommunications Bill Committee during the earlier part of the Session, and I am now serving on the Ordnance Factories and Military

Services Bill Committee—those two Bills are concerned with privatisation—and I have served as a member of the Select Committee on the Treasury and Civil Service, which was interested in asset sales.
I was intrigued by the report of the PAC. It is of extreme public importance because it goes to the heart of one of the main strategies of the Government's economic policies—the shedding of the public sector and the privatisation of public assets. That raises so many issues, not just for the future of our industry, the Government's stance and political considerations, but for the economy.
The Chancellor's Budget last week showed how proposed asset sales—£2·6 billion this year—have had a considerable effect upon the apparent nature of the public sector borrowing requirement. That, with the comments by the Treasury and Civil Service Select Committee on how asset sales should be accounted and whether they are being correctly and helpfully accounted by the present procedures, and the real technical difficulties that the hon. Member for Horsham described, make this a difficult matter even if it is thought that the policy is correct. All those matters make the tenth report interesting now. Although it appeared in the 1981–82 Session, it could not be more topical.
The report deals with the sale of the shares in British Aerospace, Cable and Wireless, Amersham International and British Petroleum. It is a short report. The evidence took only one day and three witnesses only were called. However, some striking aspects immediately come off the page when one starts to read. The four share sales were offered at a fixed price. They were all underwritten—we learn from the report that a tender system was considered for Amersham International—and oversubscribed to a greater or lesser extent. The Commission payable on the four share sales came to an amazing £21·3 million. They have a great deal in common. There are matters that the Government should be considering and learning from them.
The other striking comparison—I am sure that even the Financial Secretary will agree with this—is that a poor price was obtained for the shares. There are mixed reasons for that, and the PAC has fairly considered them. The Financial Secretary shakes his head, but he cannot be happy with the price obtained for the shares. As the PAC said, it was perhaps understandable as they were the Government's first attempts at privatisation. They undoubtedly had a mixed, but none the less political, motive for ensuring that the first privatisation moves were successful in so far as the assets were disposed of.
Leaving that and the expense of the underwriting aside, there is the wide public ownership that the Government sought through the sale of these shares. It is clear from the PAC report that that wide ownership was not achieved. It specifies British Aerospace where 158,000 individual shareholdings were taken out on the day of offer, but within 10 months that figure was down to 27,000. That is a reduction of 83 per cent.
The Government, I believe sincerely, make the case for the wider shareholding of the privatised public assets, but they should study the experience of the market and the desire of small individual shareholders to take their profit, particularly when shares are sold at a considerable discount as, in effect, these all were. The temptation for individual shareholders to take their profits in the first year is considerable. One cannot blame them for that, but it makes nonsense of the Government's case. I believe that


when the Financial Secretary answers the debate he should address himself to that problem. There are lessons to be learnt, and the Government would be exceedingly foolish if they did not read the tenth report of the PAC to see what can be learnt. It is important that the Government should do so, because the four shareholdings considered in the report are minnows compared to what the Government are now proposing.
The Government are to sell a 51 per cent. shareholding in British Telecom—that will be worth approximately £4 billion of taxpayers' money and public assets—and the royal ordnance factories where the fixed and current assets as shown in the 1982–83 accounts stand at £450 million. That scale of privatisation dwarfs the matters dealt with in the report. It is therefore doubly important that we and the Government learn the correct lessons from the report.
The Government will face other problems—foreign shareholdings and alternative means of sale. It is apparent that the idea of a fixed-price issue for an organisation such as British Telecom will not be acceptable or operable. The ideas that the Government are floating around for part-payment of the shares over two or three years is one of a number of possible schemes.
It would he interesting if the Financial Secretary, when addressing himself to the debate and the report, would give some sign that the Government have thought about that problem, are learning and will come out with some more practical and more responsible methods of selling public assets, if that is what they are intent on doing. It is important that the Government proceed responsibly as guardians of the public purse.
There are wider issues that I wish the PAC had had the opportunity, with more evidence and time, to consider. In this report the Committee was interested only in the sale of shares, but there is the vital issue of how the assets are valued. The capital reconstruction, and what is effectively the massaging of accounts, and the handling of depreciation in the company accounts, assume considerable proportions when one considers the size of British Telecom's assets.
In the penultimate year's accounts of British Telecom, depreciation increased suddenly, out of the blue and, for no reason referred to in the accounts, by 24 per cent. in one year. That presents the following year's profit and loss account in a completely different light and makes the business a different and much more attractive proposition for sale.
I believe that when studying the report the Financial Secretary should address himself to that point and say what the Government's policy is on depreciation with regard to the sale of assets, and how far, in all probity, they are prepared to go in reconstructing capital.
I am sad that the hon. Member for Horsham is not in his place because I should have liked the opportunity to have an exchange with him about the role of Civil Service pension funds in all this. He gave the example of the National Freight Corporation. Being on the Committee dealing with the Ordnance Factories and Military Services Bill I have the royal ordnance factories most in mind. In that case the Government have recognised that it will cost them £250 million effectively to buy out the principal Civil Service pension fund for the employees of the royal ordnance factories.
Even if they sell all the shareholding in the holding company—and the Government have not yet disclosed

what they will do—they are unlikely to raise more than £300 million. That is the sum that the chairman of the royal ordnance factories, Mr. Clarke, has suggested might be the proceeds, although the fixed and current assets are in the book at £450 million, so there could be £150 million sudden discount. Even if the Government got £350 million for all the shares, there would be only a £50 million profit. The pension fund will have to be reconstructed whether or not all the shares are sold, and it is unlikely that they all will be.
Therefore, on selling off the royal ordnance factories the Government will be making a considerable loss—perhaps £50 million, possibly £100 million or even £150 million, plus the discounted loss on fixed and current assets. When the Financial Secretary faces up to those figures and when he considers the points that are validly, sanely and calmly made by the hon. Member for Horsham, surely the financial case for the sales of public assets will disappear over the horizon. The Financial Secretary should address himself to that.
The report shows clearly that there is a vital role for the Public Accounts Committee in future in scrutinising not only the sale of these far bigger assets but the valuation and the preparation for sale. I am not sure whether that is something for the PAC or whether it would be more properly divided between that Committee and the Select Committee on the Treasury and Civil Service. It may be that there is a role for both Select Committees. Between them they owe it to the public and to the House to scrutinise these privatisation plans. They should do it to save both the financial and the political face of the Government. To go ahead without a great deal more serious thought and scrutiny would be thoroughly irresponsible and would not be a sane, sensible and coherent use of public assets.
This is brought home further by the fact that in the Ordnance Factories and Military Services Bill Committee we have been talking about valuation. The Minister of State and the Under-Secretary have rejected the idea of basing it on historic on current cost or on price-earnings ratio. On three occasions, including this morning, they have come up with a brand new theory for the valuation of public assets; it is called by them the theory of usefulness. It has nothing to do with historic or current cost or price-earnings ratio or with any other accepted method of valuation. It is their theory of usefulness.
The Treasury, Treasury officials and the Financial Secretary should have a word with the Ministry of Defence and the Secretary of State, because what is proposed is not satisfactory. It would make a laughing stock of the Government if they valued £450 million of public assets on a wholly specious and meaningless theory of usefulness. If they go ahead on that basis the Public Accounts Committee will have to carry out a serious and substantial investigation.
The tenth report for 1981–82 is extremely important and pertinent. I wish it had been longer. We shall need more reports like it from the Public Accounts Committee and possibly from the Treasury Select Committee. Because of this report the House and the public are greatly in the debt of the Public Accounts Committee.

Mr. Tony Favell: Like the hon. Member for Stoke-on-Trent, Central (Mr. Fisher), who has spoken so eloquently, I am not a member of the Public Accounts


Committee and I, too, came here to listen to proceedings rather than to speak. Obviously I cannot speak with the expertise or knowledge that members of the Committee have shown. One thing I have learned is that the work that the Committee does is immensely valuable and is undervalued by the House. This debate should have been held long ago. Debates on reports by the Select Committee should be held regularly.
My attention has been directed to the seventeenth report for 1981–82 which deals with the Department of Health and Social Security; that report was printed on 21 May 1982 yet here we are in March 1984 debating it. There has been a general election in between, but that was on 9 June 1983. We spend a great deal of time in the House discussing how we will raise money and far too little time on how it is spent, which is just as much in the interests of the taxpayer.
If this were a report on the activities of an industrial concern, some of the matters to which the Committee has drawn attention would be hair-raising, to say the least. Paragraph 4 says:
As regards DHSS's own lack of up-to-date information on manpower in the NHS, the Department told us that their operational need was only for an annual view of the total structure of the NHS payroll, which was obtained by an annual census each September. They now had the provisional figures for September 1981"—
this was in May 1982—
which was a significant improvement on earlier years.
We are not dealing with a tinpot, tuppenny-ha'penny business but with the largest employer in Europe, a concern that employs 1·25 million people. Here we have the Department that controls this enormous, high-spending Department saying that it is enough to have a census once a year, nine months late, of how many employees the Department has. This is the most extraordinary way to run any concern. I venture to suggest that we would not run even a sports club in this way.
Paragraph 7 reports an improvement on what had gone before:
On 22 January 1982 the Secretary of State announced in the House of Commons new arrangements to ensure better accountability to Ministers and within the NHS. These would focus on the progress made in each region towards implementing agreed national strategies and determining the action to be taken in the following year.
It was reported that that system would start in 1982–83. In fact, we heard in the debate on the Supplementary Estimates on 8 March that those reviews have been implemented, but this is two years after the event. During that time approximately £32 billion has been spent. If any company were run in this way it would be out of business within weeks. The lack of control is extraordinary.
It was disclosed during the debate on the Supplementary Estimates that the voluntary redundancy programme had been hopelessly underestimated. It was reported that that programme, which took place on reorganisation, had been originally estimated at £8·6 million, but that eventually it cost about £50 million. Again, we are not talking about peanuts. We are talking about approximately £40 million. The explanation given by the Department was that the original estimate was more of a guesstimate. It is simply not good enough to have guesstimates about this amount of public expenditure.
The work of the PAC is vital, and I venture to suggest that without its reports, the improvements that were

announced during the debate on 8 March for the control of manpower and accountability of the regions within the DHSS would either never have been implemented, or would have been implemented much later. How much better it would be if the Committee's report had been debated on the Floor of the House within a matter of months, instead of two years later. I suggest that a great deal of public money would have been saved, and perhaps the rise in prescription charges announced two weeks ago might not have occurred.

Mr. Michael Shersby: I am pleased to have the opportunity to participate briefly in this debate. I want first to pay tribute to the Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). I have the privilege of serving on the Committee of Public Accounts, having been a member only since last July. During the 11 years or so that I have been in the House, I have found the Committee's work very worth-while. I have the feeling now that I am at last getting to grips with some of the problems that hon. Members have to consider. Also, I am beginning to find out why taxation has been so high, and why the taxpayer has got poor value for money on so many occasions.
One of the great advantages of the Committee of Public Accounts is that it operates in a non-political way. We operate very much as a team. We have to spend a great deal of time studying the papers that are made available to us for the two meetings that take place each week. that is necessary if the questions that we direct at witnesses are to be of value. So I believe that this Committee and its reports represent one of our most valuable parliamentary activities.
I agree with the hon. Member for Fife, Central (Mr. Hamilton) that it is a great pity that so few hon. Members are present today. Not long ago, this came to the attention of one of my constituents, who wrote me a sharp letter asking why it was that so few of the 650 Members attended debates on the PAC reports, saying that I should do better myself. I was able to write back and point out that not only did I attend the debates, but that I was a member of the Committee. I said that I hoped that he and other members of the public would take more interest in what we did. I am sympathetic to the notion that parliamentary time should be found for more frequent debates, so that we are not faced with a plethora of reports that have to be disposed of in one day. It is a most unsatisfactory procedure.
As I listened to the debate I could not help thinking that one way to deal with the problem would be to have some debates on the Floor of the House and other debates in a Committee upstairs which, of course, would be open to members of the public, so that more scope could be given to the discussion of our reports.
I apologise, Mr. Deputy Speaker, that I have not been present throughout the debates, but I have been in Standing Committee G, which has just completed its thirtieth and—I am relieved to say—its final sitting on the Rates Bill.
I want to comment on one of the reports, which illustrates how the PAC works and how it examines the reasons why the taxpayer has not got good value for money. I refer to the ninth report of Session 1983–84 about Hamilton college of education and the disposal of the land and buildings. There, the Committee was dealing with the


sale of a college that was built in the mid-1960s, at a cost to public funds of about £2 million. In 1982, agreement was reached for the sale of the main college building, with playing fields and halls of residence, for £680,000—about one third of the original construction costs, and a very small fraction of the current replacement cost of £20 million. How could that happen? How could a Department of State—in this case, the Scottish Education Department—and a small sub-committee of the college, get themselves into a situation where they disposed of a public asset, which today would cost £20 million to provide, for the piffling sum of £680,000? How could the taxpayer expect to receive a satisfactory explanation from those who were responsible? The PAC's job was to find the answers to those questions.
The board of governors of Jordanhill college of education and the joint Jordanhill-Scottish Education Department sub-committee dealt with the disposal of the property. They were responsible for ensuring that the Scottish Education Department was a party to all the discussion. There was no question of the board of governors of the school being solely responsible. It was a joint operation with the Scottish Education Department. As one would expect, the Scottish Education Department took the advice of the chief valuer for Scotland about how to conduct the sale, and it specifically sought advice about whether estate agents should be employed, as well as about the possible selling price. It was eventually agreed that the sale should be handled by the college's own solicitors.
The PAC spent a considerable time on this issue because, certainly to English Members, it seemed unusual that it was handled by the solicitors, instead of by a large and perhaps a well-known estate agent operating in Scotland, with all the benefit of its experience of the property market. In fact, it is not unusual for solicitors to act in that way in Scotland. So perhaps one should not criticise that.
The college was advertised in four papers—The Times, The Scotsman, the Glasgow Herald and The Times Educational Supplement. It appeared in one issue in the period between 14 and 18 December 1981, and in one issue in the period between 11 and 15 January 1982, and 40 brochures were sent to people whom it was thought might be interested in the property, its playing fields, halls of residence and all the other facilities that were available.
My understanding is that the run-up to Christmas and the early part of January is a time when most good Scottish citizens are engaged in activities other than studying the property market and spending sums of about £20 million on property. They may well spend it on other things that they consider are desirable at Christmas time or in early January. Certainly their minds were on other things. One would expect, therefore, after the advertisements had been unsuccessful, that the sellers of the property would have advertised the property far more extensively in the national daily newspapers in Scotland and England during February and March of 1982, and that they would have sought the advice of expert estate agents to make sure of getting a good price for the property. But they did not.
Only four offers were received by the closing date of 23 July 1982. The highest of these was for £1,550,000, but this did not commit the tenderer to complete until he had obtained all planning permissions and development grants and a firm guarantee to buy the developed property. So that particular bidder wanted absolutely everything in return for the price that he was prepared to offer. The only

other bid for the whole site was dependent on detailed planning permission for change of use of the property. The sum of £650,000 offered was exactly the same as the sum of the two remaining offers.
Before seeking offers, the joint committee had discussed with the local district council the likelihood of obtaining planning permission. In the report it is made clear that the council had concluded
that permission was unlikely for any use of the main college block for other than educational purposes, although the Council had indicated that they would consider a proposal for conversion of the halls of residence to housing. They were not prepared to allow any development of the playing fields. The Council confirmed this general attitude after the offers had been received, although they indicated that conversion to a hotel and conference centre might be acceptable and other proposals would he considered on their merits.
The local district council was not, therefore, being unreasonable. It considered very carefully the various options open to it and made it clear that conversion to a hotel and conference centre might be acceptable and that other proposals would be considered on their merits. Although I have not had the pleasure of visiting this particular college, it seems to me that, situated as it is, quite near a racecourse, it would not be unreasonable to assume that it would be quite an attractive conference centre or even——

Mr. Maxton: Perhaps I can add a little to this. Not only is it near a racecourse, it is near a big country park and also less than three quarters of a mile from the main motorway between Glasgow and the south.

Mr. Shersby: I am very grateful to the hon. Gentleman. He is very familiar with the area. I remember that during the proceedings of the Committee he drew attention to some of these matters. I am glad that he has refreshed my memory on them today. As he rightly points out, it was not only near a racecourse, it was near a very fine park and had excellent access by motorway. So here we have premises which comprise excellent accommodation, playing fields and all the rest, valued at £20 million in terms of replacement cost, being sold for this comparatively small sum of £680,000.
It was only at this stage, so the Committee of Public Accounts was told, that the Scottish Education Department again sought the advice of the chief valuer. He wrote to the Scottish Education Department in August 1982, giving his views on the way in which the sale had been handled. Although he said that his estimate of £6 million as a possible price represented a sale in the most favourable conditions,
he was not satisfied that the market had been adequately tested".
Neither was the Committee of Public Accounts.
The chief valuer went on to suggest:
that public bodies might be interested if they knew how low a price was expected; that the current cost of providing the building would be about £20 million; and that the 34 acres of the site outside the loop of the racecourse could be worth about £25,000 an acre.
Thirty-four acres at £25,000 an acre is a lot of money.
The Scottish Development Department estates office, which was also asked for advice, thought that the offer for the halls of residence was reasonable but that the rest of the college was worth more than £270,000. It even went so far as to recommend that a major firm of estate agents be employed to market this part of the property comprehensively. That did not happen. The Scottish Education Department thought that all the offers were very


low and considered whether to seek better ones, but decided that the market had been adequately tested and that re-advertising or engaging estate agents
would be unlikely to produce a different result and would prolong the need to maintain an empty property at substantial cost to public funds.
Obviously it costs a lot to keep a building of this size heated, secure and so on. Nevertheless, the sum mentioned to us for doing that, which I think was in the region of £300,000, is a comparitively small one set against the total cost of this particular college and the price that should have been obtained for it. This is the situation that we were considering. In paragraph 21 of our report, we say:
In these circumstances we find it most surprising that, limited advertising having produced only four unattractive offers, SED once again rejected the Chief Valuer's advice to use estate agents in conjunction with the District Valuer to apply a much greater marketing effort; and decided to sell at a bottom of the market price.
That sums up the situation very well. In paragraph 24 of the report, we say:
The Treasury told us that although it was SED's responsibility to sell the property for the best price they could get, they were surprised that SED did not tell them that they had rejected the Chief Valuer's advice on the handling of the sale.
Of course, the PAC shared the Treasury's surprise at the way in which the whole business had been handled.
This case illustrates the way public money is spent and how the taxpayer fails to get value for it. It is also a strong condemnation of the way in which this whole matter was handled by those responsible. It should not happen today. There surely cannot be a Member of the House of Commons selling his house who, if the first estate agent or solicitor did not succeed, would not try another. There cannot be a single Member who would advertise his house in the period immediately before or immediately after Christmas and expect that the maximum number of offers for the house would be forthcoming. Surely he would put his property on the market at about this time of the year. Next week is, I think, the optimum time, when the daffodils are out. It may be a little later in Scotland. Surely these are elementary considerations that would be borne in mind by anyone seeking to sell any property anywhere.
The case also illustrates the valuable work done by the PAC. I hope that the officials and Ministers concerned take note of what has happened and make quite sure that they put in place new procedures that will ensure that it cannot happen again. I hope very much that the House will be told what steps have been taken by the Scottish Education Department to ensure that when in future it disposes of property it will be obliged to do so in such a way that the maximum number of people know about it and that it stands a really good chance of getting a fair price for the public asset that it is responsible for handling.

Mr. Lewis Stevens: I add my tribute to the work of the Public Accounts Committee in looking at the expenditure of the various Departments. I am not a member of the Committee and I have found it intriguing to read some of the reports—not all of them by any means—that it has presented. The one that caught my attention is the twenty-second report, which concerns itself with "taxpayer compliance and the black economy". Few hon. Members on either side of the House would

disagree that the black economy needs sorting out so that we can get the maximum amount into the Government purse.
We also recognise the dangers of the black economy. It makes some businesses unfairly competitive. In effect, they have an unofficial Government subsidy helping their prices. The smaller business can undercut many of the more reputable firms. On more individual matters, the casual worker can nip in and do unfairly priced jobs. We hear much about the so-called cowboys who thrive on the black economy. We need to put this right.
There are some things in the report that caused me concern. When I read it from the back, as I normally read a newspaper, I noticed from the table on criminal proceedings, given on page 55, that there were only 174 prosecutions and only 157 convictions. We have a good idea that there are many people involved in the black economy, so that is a comparatively small number. That information is brought out well by the report.
I am surprised to find that I greatly agree with some of the comments by the hon. Member for Fife, Central (Mr. Hamilton). That may not do my political career too much good, but I sympathise greatly with his points about the black economy.
It seems to me that the report, although accepting that the black economy is costing about £4 billion, hesitated to say that something has to be done urgently because of the large sums of money involved and the unfairness of the system. There are one or two points in particular. It did not go into any depth about how the Inland Revenue operates. The report looks at the American ability to take samples of taxpayers, to examine in depth what their accounts are about and to use random samples to improve the position. It says:
We have not considered the full implications of removing the limitation from the Inland Revenue. But, considered solely in terms of efficiency in combating tax evasion, the limitation seems regrettable because the use of modern statistical methods might well assist the Department".
Knowing at first hand the ability of many civil servants, and that the techniques within the Civil Service are usually modern, I am aware that we already use some of the modern statistical techniques available to pinpoint the more likely cases that could be looked at. I should like to hear that the Treasury has added into the Inland Revenue better statistical methods, particularly the use of computers, to try to identify more clearly the cases that we should be looking at. That may need an alteration in the law, but I am sure that, from the records of the Inland Revenue, that analysis could be made to identify problems.
The report goes on to say that one of the problems of the Inland Revenue today is
difficulty in recruiting suitable staff and retaining trained inspectors.
That would suggest that, perhaps, there is a need for the Inland Revenue and the Government to consider the competition with the accountancy professions and to ask what training the Inland Revenue should be doing to get the type of people that it wants, in particular to investigate company taxes and the evasion of such taxes. Much of that training could be done internally. The Inland Revenue has already transferred staff from one area to another.
The hon. Member for Fife, Central made it clear that he saw the need to put people into the Inland Revenue as a priority, although our overall approach has been to reduce the Civil Service. However, it is important that


people go into the Inland Revenue. Such a move would be widely cost-beneficial. With £4 billion missing, there is plenty to come in. There is a case for increasing the investigatory staff of the Inland Revenue in that area, and I hope that the Treasury will look at the amount of effort going into investigation in the Inland Revenue.
The DHSS has put a lot of successful effort in the investigation of fraud. It has been criticised for this, but if there is fraud, it does not matter whether it is within the ambit of the Inland Revenue, the DHSS, or Customs and Excise. It is all anti-social and against the public interest in total and that investigatory power should be there. None of us would wish to support the idea that people can get away with the sort of tax evasion that we have known in the past.
Later, the report says:
The size of the black economy is clearly much influenced by the effectiveness of the means the Government employ to deter fraud and abuse.
That is fairly obvious, and by the sound of it the Inland Revenue has not been particularly successful. On the first page the report says:
87 per cent. of cases examined … disclosed understatements of profits".
If such a large percentage reveal that, something is wrong, and we should be investigating even more cases.
On page 37, there seems to me to be an element almost of naivety. Sir Lawrence Airey was being examined, and he said:
There are other areas. There were simplifications suggested in one of the Rayner exercises in relation to Schedule D … we will no longer go hunting for small sums of money like £10 or £15".
It concerns me that in 1981–82 such a basic statistical approach was relatively new and we were not looking for the best return. That is a rather simplistic approach. There are many sophisticated techniques in the Inland Revenue and Civil Service, but it appears that we are not using them to the best advantage, if that is the correct interpretation.
These reports are important. Many of them are two years old, which is something of a disadvantage, but they serve a great purpose. If they draw our attention to subjects such as the black economy and reinforce our determination to get something positive done and give the Inland Revenue the support and facilities that it needs, they will have been well worth while.

Mr. Terry Davis: Apart from the special debate about premature retirement in the National Health Service two weeks ago, it is two years since we had a debate on the reports of the Public Accounts Committee—a point that has been mentioned by several hon. Members. In the meantime, we have seen a change in the chairmanship of the Public Accounts Committee. Many right hon. and hon. Members on both sides of the House have paid a justified tribute to the work done as Chairman by my former right hon. Friend the Member for Heywood and Royton, Joel Barnett, now Lord Barnett. We have a very worthy successor in my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who brings some distinction to the chair of the Public Accounts Committee because he was previously for six years a member of the Committee, then became Financial Secretary to the Treasury, then Opposition spokesman—indeed, he spoke from this Dispatch Box during the debate a couple of years ago—and has now become the Chairman of the Committee.
I served for only a few months on the Public Accounts Committee before I was called to other things, and I found it a most enjoyable part of my time in the House of Commons. Nevertheless, I can assure my right hon. Friend that I have no intention of following him from the Dispatch Box to the chairmanship of the Committee—certainly not within the next two years.
With his typical modesty, my right hon. Friend paid tribute to his predecessor and to the work of the other members of the Committee as well as to the Comptroller and Auditor General and his staff, but many hon. Members in the debate have praised his contribution. It is true that the atmosphere of and the work done by the Committee owe a great deal to the person who is Chairman.
Many members of the Committee, and many other hon. Members, have referred to the length of time that we have waited for this debate. It has been too long, and we are today dealing with too many reports. To try to debate 46 separate reports, some of them dealing with several subjects, is an impossible task for the House. As my right hon. Friend the Member for Ashton-under-Lyne said, each report could be the subject of a debate, and the position is very unsatisfactory. I thought that he was a little kind when he attributed the delay to the general election. It was 14 months between the last debate and the general election, and we have had another nine months since then. It seems to me that the delay has been due to the tradition or convention that the reports of the Public Accounts Committee should be debated once a year. I agree with several hon. Members who have said that we should debate the reports of the Public Accounts Committee more often. The hon. Member for Stockport (Mr. Favell) argued the point most forcefully, and I agree with him. I also agree with the hon. Member for Scarborough (Sir M. Shaw), who said that the value of the debate is lessened by the number of reports and the time that has passed since their publication. I believe that it also affects participation in debates.
Several hon. Members—in particular my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. Members for Horsham (Mr. Hordern) and for Uxbridge (Mr. Shersby)—pointed out that very few Members take part in these debates unless they are themselves members of the Public Accounts Committee. My hon. Friend the Member for Fife, Central (Mr. Hamilton) put his finger on the reason for this when he said that the debate is billed as a debate on the reports from the Public Accounts Committee, and therefore other hon. Members tend to leave it to the members of the Public Accounts Committee. I believe that we should have much greater interest and participation in the debates if they concerned subjects rather then reports, and I suggest that the House consider that point. Certainly we are all agreed that we need more debates.
As the hon. Member for Scarborough pointed out, we do not need to debate all the reports of the Public Accounts Committee, but we should at least devote enough time to debating the more important reports to do justice to the work of the Committee. I emphasise that I am not suggesting that a debate in the House of Commons is the only purpose of a report from the Public Accounts Committee, or that we can consider a report as having been finished, or disposed of, as the hon. Member for Uxbridge put it, as soon as it has been debated. On the contrary, we can often learn lessons for the future from the failures of


the past, as my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) reminded us in his comments on the tenth report from the 1981–82 session.
My hon. Friend the Member for Normanton (Mr. O'Brien) drew attention to the report on joint financing by the National Health Service and the social services authorities, and pointed out that we could obtain better value for money and that that did not necessarily mean that we spent less money. We may spend the same amount and obtain better value by getting more for our money. That is certainly the philosophy of my right hon. and hon. Friends and myself.
My hon. Friend the Member for Normanton was not a member of the Committee when it considered that particular subject but, as he said, the whole matter should be kept under review. That is a very important part of the role of the Public Accounts Committee. It is important for it to return to some subjects again as it decides from time to time to check on the progress that has been made by Government Departments in the implementation of the Committee's recommendations. It must be emphasised to Government Departments that the House does not regard a report as having been finished with as soon as it has been debated.
My hon. Friend the Member for Coventry, North-East (Mr. Park) and the hon. Member for Scarborough drew attention to the shocking escalation in the cost of the Chevaline project from £175 million to £1,000 million. They referred to the lack of any requirement to disclose costs and increases in costs. As one of them said, that will not do. My right hon. Friend the Member for Ashton-under-Lyne informed the House that in future the Public Accounts Committee will monitor all defence projects that are expected to cost more than £100 million. All hon. Members should welcome that improvement and extension of the Public Accounts Committee's role.
There were some comments about nationalised industries and my right hon. Friend pointed out that the Public Accounts Committee recommended that all nationalised industries should prepare corporate plans, and said that these corporate plans would assist the Government in the allocation of funds. The hon. Member for Northampton, South (Mr. Morris) emphasised that the lack of corporate plans was a serious defect in the way in which nationalised industries are run. I feel, however, that the real failure shown by the report of the Committee is the failure not of the nationalised industries but of their sponsoring Departments.
I would repeat that comment in reply to what was said by the hon. Member for Ludlow (Mr. Cockeram) about the factory building programme undertaken by the English Industrial Estates Corporation. Reading the Committee report, it seemed to me that the strongest criticism concerned the failures of the Department of Industry.
The clearest failure of all identified in these reports is, of course, that in the ninth report of the 1983–84 session on the sale of Hamilton College. Many hon. Members commented on that report. My right hon. Friend the Member for Ashton-under-Lyne and my hon. Friend the Member for Cathcart would be expected to comment on what one of them described, I think, as a rip-off. But some Conservative Members also drew attention to the implications of that report and expressed their concern about what had happened. The hon. Member for

Northampton, South referred to it in strong terms. The hon. Member for Uxbridge took us through the history of what happened. I shall not repeat his description of that saga. I thought that his summary of events was very fair. I must say that I agreed with another Government Member—the hon. Member for Rutland and Melton (Mr. Latham)—when he said that his conclusion, having listened to all the evidence, was that the matter had been "very poorly handled".
Most of the discussion about Hamilton college of education has centred on the price. That is understandable. People are shocked to learn that this college has been sold for £600,000, when it had been valued at £6 million in favourable conditions, and that therefore a public asset has been sold for, apparently, one tenth of what it might be worth. I believe, however, that the real point is not the price but the way the sale was handled. Having listened very carefully to the hon. Member for Uxbridge, it is clear to me that the Scottish Education Department ignored existing guidelines. It ignored the procedure recommended by the Halliday committee. It ignored the advice of the chief valuer, not once, but twice. It was the hon. Member for Uxbridge who said that the Scottish Education Department had overlooked "elementary considerations". It was he who used the expression "strong condemnation".
I have read with interest the Treasury minute which has been put before the House. It accepts that there were three separate failures by the Scottish Education Department. I shall be grateful if the Financial Secretary will tell us what action has been taken as a result. I accept that steps are now being taken to ensure that nothing of the sort shall ever happen again. So much for the future, but what about the past? If Ministers were not personally responsible for these failures, if follows that civil servants were to blame. I hope that the Financial Secretary will tell the House what disciplinary action has been taken within the Civil Service. I do not ask him to identify the civil servants. I ask him to tell us clearly and without equivocation whether any civil servants have been reprimanded or disciplined in any way for the failures of the Scottish Education Department.
The hon. Member for Rutland and Melton told us that the matter has been "very poorly handled" in his opinion. Poor handling should not be good enough for the Government. What has been done or said to those responsible for the poor handling?

Mr. Willie W. Hamilton: Does my hon. Friend recall the decision of Sir Thomas Dugdale in the Crichel Down affair,? I was a member of this place when Sir Thomas, although not responsible himself for the Crichel Down incident, offered his resignation in the last sentence of his speech from the Government Dispatch box. He felt that the political master responsible for the case must accept responsibility. He took the honourable course and resigned, in striking contrast to the events that have followed the closure and sale of Hamilton college.

Mr. Davis: I remember the Crichel Down affair although I was not a member of this place at the time. I remember discussing it at school in what was then called current affairs. I remind my hon. Friend that there has been another incident in more recent times. It arose in 1979 when the PAC was considering a matter that it thought had been badly handled. The PAC asked the permanent secretary at the Department of Energy what had been done as a result of the failures in his Department. It wanted to


know what had been done in reprimanding the civil servants who were responsible. On that occasion it was felt that certain civil servants were responsible. It is a matter either of ministerial responsibility or of civil servants falling down on the job. It is clear that the Hamilton college sale was badly handled and, therefore, the Minister concerned must accept responsibility, or we are entitled to be told by the Financial Secretary, who is responsible for the Civil Service, that, through his Department, disciplinary action of an appropriate sort has been taken in respect of those who overlooked elementary considerations. The House is entitled to be told one way or the other.
Several of the reports published by the PAC show that the Committee is anxious to encourage better performance by Government Departments. The hon. Member for Scarborough made a plea for greater attention to be paid to internal audit departments within Government Departments. He drew attention to the need for permanent staff instead of temporary postings. He argued that there should be more trained accountants within internal audit departments. I have a great deal of sympathy with both of the hon. Gentleman's arguments, but I believe that an internal audit department needs both permanent staff and those who are passing through, for the latter group will learn skills and attitudes that they will take elsewhere. There is a danger of putting too much emphasis on permanent staff.
Similarly, there is a danger in putting too much emphasis on trained accountants because others can sometimes contribute to the work of an internal audit department if they have skills other than those that stem from training in accountancy. That is especially so if the aim of the department is to obtain better value for money. I should belatedly declare my interest, because I used to be an internal auditor.
The hon. Member for Scarborough and I are both arguing for a more professional approach by internal departments. In talking about value for money, it is important for departments to be conscious of the need to give value for money in a way that is slightly different from the concept that is often adopted. It is important to emphasise that the assessment of value for money should not be made in isolation, for it will involve the comparison of different programmes, as described by the hon. Member for Horsham.
The hon. Member for Northampton, South, who has been a member of the PAC for many years, argued that there should be a common accounting basis for nationalised industries to assist the PAC and the House generally in their work. In principle, I am inclined to agree with him, but in practice I suspect that there might be some difficulties. Nationalised industries are all engaged in different businesses, and what is appropriate accounting in one type of business or industry may not be appropriate in another. I throw the argument back to the hon. Member for Northampton, South by saying that his suggestion seems to be an excellent one for the PAC to consider.
The hon. Member for Northampton, South said also that he went all the way with the Prime Minister on the question of reducing the number of civil servants, but argued that in some Departments there was a need for redeployment. He referred especially to the need to investigate fraud in respect of benefits, national insurance contributions and tax. According to the hon. Gentleman's

figures, tax fraud is the most important of the three categories. This brings me to the twenty-second report in the Session 1981–82 on cost-effectiveness of investigation staff and the second report of the Session of 1983–84 dealing with the prevention and detection of evasion of national insurance contributions as well as social security benefit fraud and abuse.
Several hon. Members have referred to the reports, but I am surprised that nearly all of them were Labour Members. They included my hon. Friends the Members for Coventry North-East, and for Fife, Central and my right hon. Friend the Member for Ashton-under-Lyne. Apart from the hon. Member for Northampton, South, I think that the hon. Member for Nuneaton (Mr. Stevens) was the only Conservative Member to refer to the reports. I read them with great interest and I was struck especially by the figures contained in the twenty-second report in the Session 1981–82, which show that, for every official employed in detecting fraud in the Inland Revenue, there was a gain to the Treasury of £92,000 in extra tax, penalties and interest. That amount was contrasted with the average figure achieved by officials employed in the Department of Health and Social Security, which is £38,000. I should add that the figure was £170,000 if the official was checking unpaid contributions instead of checking those claiming benefit. The DHSS does not estimate the total amount of fraud under either heading.
Slightly different figures appeared in the second report Session 1983–84, which showed that the amount achieved by an official in the DHSS was £42,000. The report included a table which showed a spread from £26,000 for local office staff up to £90,000 for staff in specialist claims control. An important phrase appears in the memorandum of the Comptroller and Auditor General. It tells us that these figures for so-called benefit frauds are based on
estimated savings from the termination of suspected fraudulent claims.
There is a great difference between this work within the DHSS and that undertaken by the Inland Revenue. The money that is recovered by the Revenue is not based on an estimate of suspected fraudulent claims. I draw that fact to the attention of the hon. Member for Nuneaton because he talked about the DHSS as if the figures represented actual fraud. The emphasis should be put on "suspected".
The attitude of many of the staff in the specialist claims control is to stop first and discuss afterwards. Its members of staff come and go. They are specialists in hit and run. The first thing that a member of the specialist claims control will do is to stop the payment of benefits. Later he will talk about whether the benefit was justified. Benefit is often reinstated when the plaintiff appeals, and I am suspicious that the figures in the report do not allow for the fact that benefits have been rightly resumed after a member of the staff of the specialist claims control unit has left the local office. I have some personal experience from constituents' cases to that effect.
The figures show in any case that we get better value for money—and that, after all, is our aim—by employing more people to detect Inland Revenue fraud rather than employing people to stop fraudulent benefit claims.
My right hon. Friend said that the Inland Revenue has estimated that the black economy costs the Treasury a total of £4 billion a year. The Department of Health and Social


Security says that it cannot estimate the amount of fraud. I have my own suspicions about why the DHSS prefers to avoid any estimates. I suspect that it may be because the lack of any estimate by the Department enables some extreme Conservatives to indulge in the propagation of myths about scroungers.
The true scroungers in our society are shown by other reports published by the Public Accounts Committee. I refer specifically to the fifth report Session 1982–83, which showed that the defence industry is ripping off the Ministry of Defence. That is the report on pricing and post-costing of non-competitive contracts. The report shows that the target profit rate agreed with the Ministry of Defence remained at 20 per cent. return on capital at a time when it should have been reduced. That cost the Treasury £75 million a year. When the Financial Secretary comes to reply to the debate, I hope that he will tell us whether the review board report, mentioned in that Public Accounts Committee report, has now been received, what has happened to it and whether it has been implemented.
The suppliers to the Minister of Defence were not alone. The other scroungers in our society are the pharmaceutical industry which is also operating on noncompetitive contracts. From the tenth report Session 1982–83, one notes that the Public Accounts Committee found that the return on capital in that industry had risen under this Government from 21 per cent., to 23 per cent. at a time when it should have been reduced.
The PAC has done its job, and done it well. Now we want to know what the Government have done. After all, the Government were elected on a promise to obtain better value for money. What have the Government done to obtain better value for money as a result of these reports?

The Financial Secretary to the Treasury (Mr. John Moore): This has been a long but enjoyable and illuminating debate, I think, for most hon. Members. It is one from which hon. Members, whether or not they are members of the Public Accounts Committee, will have benefited. I say that as someone who, like the hon. Member for Birmingham, Hodge Hill (Mr. Davis), was, unhappily, able to spend only a few months of my first year in the House on the Public Accounts Committee. Unlike the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), I did not have the privilege of spending six years on it. I was asked to do other things in the spring of 1975. I found that it was the most exciting and interesting Committee on which I served. I enjoyed the five or six months that I spent on the Committee. Throughout the 10 years in which I have been in the House, I have recognised the enormous value of work that it does.
I sympathise very much with the right hon. Member for Ashton-under-Lyne, the hon. Member for Hodge Hill, my hon. Friend the Member for Scarborough (Sir M. Shaw) and many other hon. Members who have commented on the difficulties of having to debate as many as 46 reports. I will make sure that their remarks and the remarks of my hon. Friends the Members for Northampton, South (Mr. Morris), and for Stockport (Mr. Flavell), the hon. Member for Fife, Central (Mr. Hamilton) and my hon. Friend the Member for Uxbridge (Mr. Shersby) about the character and the way in which we debate what I regard as important matters are brought to the attention of the Leader of the

House. These remarks concern the way in which we debate the reports of the PAC and face difficulties in the work that we all did on the 46 reports.
Despite the work, I join unreservedly those hon. Members who have paid tribute to the Public Accounts Committee, not only for the quality but for the quantity of work that it does. The large number of reports is a testimony to a great deal of hard work put in by the present Committee and by its predecessor chaired by Lord Barnett. Again, I unreservedly echo the tributes that have been paid from both sides of the House to the outstanding work that Lord Barnett did as Chairman of the Committee for so many years.
It was nice to hear the remarks that were made about our colleague, Sir Albert Costain, whom one could not imagine to be absent from the Chamber during debates on reports of the Public Accounts Committee.
All but two of the 46 reports are based on evidence taken by the Committee chaired by Lord Barnett. No doubt the reports of the present Committee, which has already made such a noticeable mark, are the forerunners of many more. On this occasion, I am sure that we would all wish to acknowledge the considerable contribution of their predecessors to the agenda for this debate. They contributed not only to most of the reports that we are considering today, but to the passage of the National Audit Act. I join my hon. Friend the Member for Horsham (Mr. Hordern), the right hon. Member for Ashton-under-Lyne and other hon. Members who said how indebted the House was to my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) for introducing that measure. I am sure that he and other hon. Members will readily acknowledge the valuable support of other hon. Members—for example, my right hon. Friend the Member for Taunton (Mr. du Cann), who has long been concerned with parliamentary scrutiny of public expenditure.
The Act is the first substantial piece of legislation on national audit for 60 years. It builds on the massive foundation laid by Gladstone in 1866, and it is a worthy addition. The National Audit Act tackles some difficult issues—for example, the status of the Comptroller and Auditor General. All are agreed that he should be completely independent, yet he works closely with the Public Accounts Committee on behalf of the House. He must also enjoy the confidence of the Government, not only because the Comptroller and Auditor General uniquely enjoys access to the files of Government Departments, but because he is a valuable source of constructive criticism leading to greater efficiency, a high priority for all Governments.
In defining the relationships of the Comptroller and Auditor General to Parliament and to the Executive, the Act sought to some extent to embody existing practices, and that is not easy when practices shaped by a delicate balance of interests have not previously been codified. In other respects, too, the Act is innovatory. It gives the House of Commons an important role in the process of appointing the Comptroller and Auditor General, and firmly establishes that he is an Officer of the House, and the staff of the National Audit Office are not civil servants. A new Public Accounts Commission examines the estimates of the National Audit Office and presents them to the House.
The Act serves another major purpose. It provides a statutory basis for the value-for-money studies which I think have been greeted by both sides of the House as one


of the key and crucial features of our current debates. They have developed over the years on a non-statutory basis. The studies are important, and the most publicised part of the activities of the Comptroller and Auditor General. It is right that they should be supported by legislation.
The National Audit Office is now in being. I am sure that it will continue to develop and improve its techniques, increase its own efficiency and effectiveness, and provide vital support for the Public Accounts Committee. The Government wish it well.
Many other hon. Members, including my hon. Friend the Member for Horsham, the hon. Member for Normanton (Mr. O'Brien) and my hon. Friend the Member for Northampton, South, who apologised for the fact that he would be absent at the end of the debate, raised legitimately—I think it is an issue that will not go away—the question of the lack of coverage of the nationalised industries by the Public Accounts Committee.
Subsequent to the passage of the National Audit Act, the Government have encouraged the industries to look at possible means of strengthening their arrangements for internal efficiency and for reporting to Parliament. The work of the PAC is particularly important to the Treasury. Indeed, it is a vital part of the process of accounting for the Government's expenditure. In a sense, it substitutes for the shareholders' interest in that most vital line in any company's account, the bottom one. It helps Parliament and the Government to make use of the public accounts.
Our common interest in economy, efficiency and effectiveness is clearly evident from the fact that the Committee's reports more and more emphasise the messages contained in the Government's financial management initiative. We are trying to do things better, the Public Accounts Committee is rightfully exhorting, encouraging and helping us to do so, and we welcome the help.
I shall try to answer as many of the detailed points as I can. I hope that the House will bear with me if I do not have at my fingertips the details of all 46 reports. My hon. Friend the Member for Uxbridge, the hon. Member for Hodge Hill, the right hon. Member for Ashton-under-Lyne, my hon. Friend the Member for Northampton, South, the hon. Member for Glasgow, Cathcart (Mr Maxton) and my hon. Friend the Member for Rutland and Melton (Mr. Latham) all paid attention to the most recent item on the agenda—the sale of Hamilton college. The House has already spent three hours debating this issue, and the mistakes made have been fully acknowledged. Steps have also been taken to ensure that such mistakes are not repeated. The hon. Member for Hodge Hill asked me for that confirmation.
The Treasury minute said that we were, as the Committee suggested, considering whether the guidance to Departments in England and Wales needs any revision. I can now say that it does not, but all Departments have been reminded of that guidance. I cannot comment on all the specific points raised by the hon. Member for Hodge Hill now, but I will endeavour to ensure that they are answered.
There is more than enough meat in the other reports. The Ministry of Defence, the DHSS and the Revenue Departments figure prominently. That is not surprising, considering the size of their operations. Nor is it surprising that the Committee's reports are usually critical. Generally speaking, the Committee's function has been to bring to light what is not satisfactory, with a view to getting it put

right. Constructive and objective criticism of departmental performance is, as it should be, the Committee's main stock-in-trade.
The Treasury and, I believe, Departments generally welcome examination of the way in which Departments have carried out the policies laid down by the House and by their Ministers. That is not to say that the accounting officers positively enjoy the vast amount of detailed work that they have to put in to be able to answer the Committee's questions. However, I am sure that they accept that it is absolutely right that the PAC, representing the interests of the taxpayer, should be able to call them personally to account, as they do. Of course there must in practice be a great deal of delegation of authority within Departments. However, there can be no delegation of responsibiity or accountability to this House. Ultimately, that accountability is the accountability of Ministers but, for all practical purposes, it is with the accounting officer appointed by the Treasury that the buck stops in departmental administration. I hope very much that as the financial management initiative takes its effect and the Committee moves into the area of the more rounded studies that we have heard about, we shall come to see more reports, such as the third report of the present Session, in which a Department is commended.
I will now dip into what, on the last of these occasions, was aptly called the bran tub. The hon. Members for Hodge Hill and for Fife, Central and my hon. Friend the Member for Nuneaton (Mr. Stevens)—who has no need to apologise for participating in a debate in which most of those present are or have been members of the Committee—the right hon. Member for Ashton-under-Lyne, the hon. Member for Coventry', North-East (Mr. Park) and my hon. Friend the Member for Northampton, South all discussed the detailed reports about the black economy.
Mention was made of the cost-effectiveness of investigation staff. I take the simple point that in purely financial terms it can be profitable to employ more investigative staff wherever their efforts can lead to recoveries of tax or prevention of social security abuse which are greater than the cost of employing them. Cost-effectiveness is not the only factor. Another, which has been central to the Government's policies, is the need to reduce the size of the Civil Service, and yet another is the public acceptability of increased investigation. That has been mentioned in speeches from both sides of the House. A balance has to be struck, and the Government have approached the problem by determining the overall departmental staff allocations consistent with manpower policy, and within them to allocate as many staff as are compatible with the other objectives to the most profitable investigative work. The Departments themselves have been responsible for this as part of their overall responsibility for deploying the resources available to them.
All three Departments involved have greatly improved the cost-effectiveness of their staff allocations to this important work, and we are getting the optimum result in terms of trying to pursue all those objectives at once. The right hon. Member for Ashton-under-Lyne referred—the comparison was made implicitly by other hon. Members—to the way in which the DHSS was relatively unable to be specific about the quantification of the total amount of money lost through fraud, whereas the Revenue Departments had, in evidence, appeared to be more specific. However, the estimates of the Revenue


Departments are no more than figures of a global order of magnitude—figures for something which is by definition not capable of calculation.
The Treasury minute in reply to the second report of 1983–84 explains why successive Governments have not attempted the measurement of benefit fraud. It would mean the taking of random samples which would for the most part concern innocent people. However, the minute promises a reconsideration in the light of the Committee's report.
It is hard to quantify in this area, but I draw the attention of the House to the letter written on 17 Febmaiy by Mr. Judd of the Treasury to the clerk of the Committee about aspects of quantification by the Revenue. I am sure that the right hon. Member for Ashton-under-Lyne will not mind if I refer to the letter. Mr. Judd reminded the Committee that
reliable measurement, or even such measurement as has been done in the case of vehicle excise duty, is not possible.
He then discusses specific direct taxes:
So far as direct taxes are concerned, Sir Lawrence Airey told the Committee on 28 April 1982 that such evidence as there was would point to the size of the black economy"—
these are the figures on which we have all been working—
being towards the lower end of the range of 6 to 8 per cent. of GDP; this would represent about £15 billion on which the tax loss could range around £4 billion … The Revenue have always emphasised that these figures are not firmly based on concrete evidence.
We all accept that, but it is important to put the figures in context.
My hon. Friend the Member for Nuneaton asked about efforts to identify and combat tax evasion where the Revenue was unable to examine taxpayers' records on a random sampling basis. Legislation involving the Revenue's powers would be required to enable the Revenue to carry out random sampling. The Revenue's powers were the subject of Lord Keith's committee on enforcement powers of Revenue Departments. The Government will need time to consider the committee's findings; it is still receiving outside advice.
On the question of the Revenue's effort on the black economy, my hon. Friend the Member for Nuneaton will be pleased to know that, although the Revenue, like other Departments, has taken its share of the reduction in the size of the Civil Service, it has been possible to increase the priority given to investigation work and to improve efficiency. There are now 10 special officers compared with four in 1979, and 300 more members of staff engaged on audit work for the next two years. Moreover, an additional 850 staff will be deployed on other investigative work in the next four years.
The hon. Member for Hodge Hill, who has constituency experience, talked of the difficulty of detecting fraud. He was right to remind us that it is a different consideration from that of the Inland Revenue. I am advised that in its second report in the 1983–84 Session the Committee expressed anxiety to the effect that the DHSS was unable to provide a reasonably sound estimate of the extent of benefit fraud. Research into the prevalence of undiscovered benefit fraud has been the subject of much debate recently. There is no easy answer without involving varying degrees of intrusion into the lives of many innocent people, as any statistically reliable

study would entail thorough investigation of a random sample of claimants, most of whom would be under no suspicion. It is mainly for that reason that successive Governments have not authorised such a project. We are taking the PAC's recommendations seriously and are reconsidering that point.

Mr. Terry Davis: Perhaps I might put two points to the Minister. First, how is it that the DHSS can estimate the amount that is under-claimed but cannot estimate the amount that is overclaimed? Secondly, is it necessary to have a random sample? Every claimant is supposed to be visited within one year of making a claim and then to be visited again on a three-year cycle. The officers who visit the claimants are supposed to check that they are receiving the right amount of money and sometimes find that they are not receiving as much as they should. I should have thought that, if enough staff were employed to do the job properly, it would be possible not so much to give an estimate as to tell us on a three-year basis how much has been found to be overpaid and how much has been found to be underpaid.

Mr. Moore: The Treasury shares the PAC's interest in this matter, so it is obvious that I shall pursue it further. To the extent that my right hon. and hon. Friends in the DHSS are concerned, I shall ensure that their attention is drawn to what the hon. Gentleman has said. I shall be interested to hear their responses.

Mr. Robert Sheldon: The Financial Secretary to the Treasury is of course aware of the Fisher committee which reported in 1973 on how the samples could be undertaken. Will he now consider that? The report is now 11 years old and most of the arguments that it advanced still apply.

Mr. Moore: I am aware of it, but thought that I was covering some of the basic objections that were regarded as substantive. This is one of those happy debates in which the Treasury, as always, shares the views and interests of the PAC.
The right hon. Member for Ashton-under-Lyne, the hon. Member for Hodge Hill and my hon. Friends the Members for Scarborough, for Northampton, South and for Horsham were rightly anxious about the problems surrounding the initiation of the Chevaline project and whether lessons had been learnt from it. The House will be interested to know that the project costs of Chevaline have not increased in real terms on the revised cost estimate of 1977. The system is now in service and the project is virtually complete, but the key issue is whether lessons from the early project stages have been learnt. The Comptroller and Auditor General's recent report on the Trident project does not dispute that. The Comptroller and Auditor General has examined the financial arrangements for Trident and, I believe, found them satisfactory.
The principal lessons that have been learnt are the need for strong central project management, fully integrated programmes and co-ordinated financial management arrangements from the outset of any major project. An important fact is that the Government accept that Parliament should be better informed about major projects and have taken steps to provide such information regularly to the PAC. That is an important illustration of the way in which the Committee is crucial to how the Government react and act so that we can scrutinise such projects better.
The right hon. Member for Ashton-under-Lyne and my hon. Friend the Member for Scarborough raised the


problems of fraud and irregularities in the Property Services Agency. I share and appreciate anxiety about cases of fraud or corruption in the Civil Service. We expect the highest standards of conduct and vigilance from civil servants and Government Departments. That is fully accepted in regard to the recent cases in the PSA. Following the discovery of the cases referred to in the Committee's twenty-fifth report for the 1981–82 Session, the PSA's procedures have been subjected to detailed scrutiny which has most recently resulted in the Wardale Touche Ross report which was published in October 1983.
The Secretary of State for the Environment made it clear that he took the report extremely seriously and that he was determined to do everything necessary to bring about the changes in the management system and management attitude that were called for. The agency began to implement improvements immediately following receipt of an interim report in February 1983. It has now completed work on several of the recommendations and action is in hand to implement the majority of the remaining ones. The PAC has recently examined witnesses from the agency on its response to the Wardale Touche Ross report. When the PAC report is available, the agency will take full account of its conclusions and recommendations in pursuing a programme of improvement initiated by the Wardale Touche Ross report.
My hon. Friend the Member for Rutland and Melton rightly stressed the critical importance of the work being done in that regard. I recognise its importance and the urgency with which it can be pursued. I can do no more than draw the attention of the House to my right hon. Friend the Prime Minister's reply to my hon. Friend the Member for Beaconsfield (Mr. Smith) on 13 March 1984 when she referred to the anxiety of the Secretary of State that the task of following up the report be pursued vigorously, and to the Secretary of State's statement on the same day.
The right hon. Member for Ashton-under-Lyne, the hon. Member for Hodge Hill and my hon. Friends the Members for Northampton, South and for Horsham drew attention to the position of nationalised industries in the production of corporate plans and the need for proper information. Obviously matters have changed considerably. I acknowledge the problem of the dating of reports. We are examining reports which, in many cases, are effectively almost three years old. This year we expect all nationalised industries to produce corporate plans. Since the PAC reported on this subject in 1982, we have made further improvements to the quality and usefulness of the plans. They are more uniform, although, as one who has been Under-Secretary for Energy, I fully accept the point raised by the hon. Member for Hodge Hill about the disparate nature of many of the businesses. All the plans now include better information about matters mentioned in the 1978 White Paper. The corporate plans are more fully integrated within the monitoring framework, and that is a significant development, following the key recommendations of the Public Accounts Committee.
My hon. Friend the Member for Northampton, South raised a considerable number of questions in an outstanding speech. He asked about guidelines on the sale of land. Such guidelines have been re-examined following the Hamilton college affair and will be examined again when the Crown obtains the right to apply for planning permission.
My hon. Friend the Member for Northampton, South asked about the accounting of nationalised industries. I have covered that point. I agree that there is a need for consistency, but we must understand the disparate nature of the different organisations. My hon. Friend asked also about up-to-date valuations, which may be needed when preparing for sales. We expect our professional advisers to help on that subject.
My hon. Friend the Member for Scarborough looked for an updating of the key area of internal audit, which was raised in the second report. I learned tonight for the first time that I share a past with the hon. Member for Hodge Hill. I, too, was an internal auditor, but I was given the job to learn to move through and into other areas. Like the hon. Gentleman, I recognise the kernel role of an auditing department and the transience of an audit. There is need for a happy blend of the two elements. My hon. Friend the Member for Scarborough will be pleased to know about the upgrading of internal auditors which has continued since the Treasury minute of July 1983.
Ten training establishments now offer relevant courses, and 370 staff began the first courses last autumn. More than 400 staff will start courses in 1984–85. The senior staff review has shown that there are sufficient accountants in internal audit to fill the posts that require professional qualifications. Although, like the hon. Member for Hodge Hill, I am not an accountant, I am aware that disciplines other than accountancy are important in profess ionalising those areas. Again, the hon. Gentleman and I share a similar view.
The hon. Member for Normanton referred to computers. Outside assistance is still required for computer audit, but we are beginning to train more specialists of our own.
My hon. Friend the Member for Scarborough asked about the successor to Sir Kenneth Sharp. His successor will be an accountancy adviser to the Treasury and will have charge of the Treasury's work on developing internal audits in all Departments. I cannot say exactly when he will be appointed. We would have him now had we found him. It is important to get the right man for this key appointment, and strong efforts are being made to find him.
The hon. Member for Normanton was joined by my hon. Friend the Member for Northampton, South in asking questions about the eighth report on the Health Service. I can bring him up-to-date about the Treasury minute of July 1983. As of March 1984, a joint working group of DHSS officials and local authority associations has been set up to review the working of the joint planning and financing arrangements. The DHSS inquiry into the identification and disposal of surplus property led to specific encouragement to help authorities in November 1983 to pursue an active estate management role with resources released by disposals being recycled for new NHS uses.
My hon. Friend the Member for Northampton, South will be pleased to know that the legislation required to allow Crown departments to obtain planning permission is before Parliament. My hon. Friend the Minister of State, Northern Ireland Office is in the Chamber. I will draw his attention to the fact that my hon. Friend the Member for Northampton, South, in expressing a personal view—I am sure that the right hon. Member for Ashton-under-Lyne will confirm it on another occasion—gave fair warning that the Committee would be concerning itself


with De Lorean and other aspects of Northern Ireland affairs and could well be spending more time on such matters.
My hon. Friend the Member for Northampton, South spoke of tax avoidance, at which the Committee had looked in the past, in relation to BL. Paragraph 21 of the Treasury minute says:
BL has now provided assurances which should prevent any recurrence of the tax avoidance problem.
My hon. Friend the Member for Horsham—in a speech in which he illustrated the qualities that he has displayed throughout the affairs of the PAC—asked two questions, one about EFL overshoot and the other about the special employment measures. I appreciate that he has a strong interest in this area of the nationalised industries, but I must stress that the criticism was about what was happening, and I accept the problem of concerning ourselves with reports that are quite old.
We believe that we are now doing much better, partly because of the Government's success in reducing inflation. It is no longer the case that EFLs are overshot by the sort of figures that my hon. Friend quoted. The special employment measures which have been criticised were instituted in a difficult employment situation. Unhappily, the situation is still not good. The Treasury minute accepts that a better comparative valuation of such measures is desirable.
My hon. Friend the Member for Rutland and Melton asked about the Treasury and the Foreign Office. I should have thought that it was hardly surprising if the Treasury and the Foreign Office—let alone the Treasury and any other Department—started with different views. Indeed, I thought that it was common ground in debates about Whitehall that the views of the Treasury were different from everybody else's. We hope—I say this as a Treasury Minister—to finish in agreement. It is highly undesirable for the Audit Commission to drive up National Audit Office salaries or vice versa. I take the point that my hon. Friend made and we shall take a close interest in the matter.
My hon. Friend the Member for Ludlow (Mr. Cockeram) criticised some aspects of the sixth report concerning factory estates. I remind him that an interdepartmental review has, since June 1983, been considering much the same questions as the Committee recorded. There are no simple answers or measures of efficiency and effectiveness, and the achievement of regional policy objectives is of paramount importance. The agencies, after all, are in business only because the private sector is not interested, and premises are required to attract occupiers. Some intermediate output measures are being explored.
New building is related to demand and vacancy rates and it is hoped in due course to be able to relate costs to common criteria, allowing direct comparisons between agencies. Private sector participation is desirable but it is inherently unlikely in this area on any extensive scale. Sales to occupants are, however, encouraged and help can be given in the form of mortgage guarantees.

Mr. Latham: My hon. Friend has given a rather laconic reply to my questions about the difference between the Foreign Office and the Treasury regarding the overseas

estate. Is it of any help to him in his negotiations in trying to get a common line in this matter to be assured that it is an issue on which the PAC will be keeping a close eye?

Mr. Moore: As I said earlier, the Treasury and the PAC seem to speak frequently with one mind and with one voice, and obviously we appreciate help and assistance in this area.
The hon. Member for Hodge Hill asked about the defence position and the review. The current review has been completed. Talks with the contractors' representatives have taken place and new arrangements will come into effect on 1 April 1984. The review board's report will be published soon. It recommended—and the parties have accepted—continued acceptance of the principle of comparability in consequence of which the profit rate is being reduced substantially. I will give the hon. Gentleman any information I can post this debate.
The hon. Member for Fife, Central and for Hodge Hill asked questions about pharmacists, as raised in the 1982 and 1983 reports. The re-examination promised in the Treasury minute was carried out. It showed that the assumption on which pharmacists were reimbursed had been over-generous to them.

Mr. Terry Davis: The Minister is mistaken. I referred to the pharmaceutical industry, not to pharmacists. There is a big difference.

Mr. Moore: Agreement was reached with the pharmaceutical services negotiating committee on a revised scale allowing for past over-reimbursements to take effect from August 1983. Subsequently, legal proceedings challenged the Department's right to recover over-payments in that way, and certain concessions had to be made. I shall deal with the matter later in correspondence with the hon. Gentleman.
I have endeavoured to cover most of the points made in a relatively lengthy debate. I must say to the hon. Member for Fife, Central that if I have missed anything in my remarks I shall give additional details in letters to hon. Members.
My hon. Friend the Member for Uxbridge and the hon. Member for Fife, Central regretted what they described as the relatively poor attendance for the debate. I can do no better than quote from Hansard in 1976:
The success of the Committee's work cannot and should not be measured by the attendance of hon. Members in this House when the reports are debated, but by the way in which it changes the future of those who appear before it, and changes the way Government operations are conducted."—[Official Report, 22 January 1976; Vol. 903, c. 1623.]
Those were the words of the then Financial Secretary to the Treasury, now Chairman of the Public Accounts Committee, the right hon. Member for Ashton-under-Lyne. I can think of no better way of reaffirming the Government's view of the importance of the PAC and the way in which we seek to act upon its recommendations than by drawing the House's attention at the conclusion of our debate to the right hon. Gentleman's words in 1976.

Question put and agreed to.

Resolved,
That this House takes note of the Sixth to Thirtieth Reports from the Committee of Public Accounts of Session 1981–82, of the First Special Report and First to Eleventh Reports of Session 1982–83, of the First to Ninth Reports of Session 1983–84 and of the Treasury Minutes and Northern Ireland Department of Finance Memoranda on those Reports (Cmnd. 8620, 8757, 8759, 8828, 8995, 9071, 9178 and 9191).

Rate Support Grant Supplementary Report

The Under-Secretary of State for the Environment (Mr. William Waldegrave): I beg to move,
That the Rate Support Grant Supplementary Report (England) (No. 2) 1983–84, which was laid before this House on 12th March, be approved.
This is the third debate on rate support grant matters since the general election. Last July the House approved the first supplementary report for 1983–84, which implemented holdback of block grant in the light of local authorities' budgets. At the same time, it approved the third supplementary report in respect of 1981–82, which adjusted local authorities' grant entitlements to reflect their outturn expenditure in that year, and on 23 January the House approved the main rate support grant report for 1984–85.
The debate focuses on the second supplementary report relating to 1983–84. It is a short, single-topic report, which simply alters the total of block grant payable to local authorities in the current financial year to reflect the latest estimate of interest rates payable by local authorities in 1983–84 of 10·85 per cent. compared with the 11·5 per cent. that was assumed at the time of the 1983–84 rate support grant settlement in December 1982. The overall effect of the report is to reduce the total of block grant by £44 million. That is equivalent to a reduction of less than three quarters of a penny rate.
Hon. Members may wonder why, at this late stage in the financial year, we do not yet know the actual interest rates paid by local authorities in 1983–84. The interest rates paid by local authorities in any year are a mixture of current and historic interest rates. We shall not know the final picture until August or September, when local authorities will provide the information on the level of interest rates actually paid by authorities in 1983–84.
It is somewhat unusual to have a debate on a supplementary report in March. For the future, I hope that we shall establish a pattern whereby there are no more than three supplementary reports in respect of each financial year—a first, in June or July of the grant year, to implement holdback of block grant in the light of local authorities' budgets and to make adjustments for any changes in variable items as appropriate; a second supplementary report 18 months later to revise authorities' grant entitlements to reflect their outtum expenditure for the year; and a third and final supplementary report the following summer, 27 months after the end of the grant year, to close the books on that year in the light of audited outtum expenditure information.
I should emphasise two points about the proposed timetable. First, we have discussed it in a preliminary way with the local authority associations. They are in favour of fewer supplementary reports, and they would like to close the books on each year as soon as possible after it has ended. The Government share that view. Secondly, however, achievement of the timetable will depend upon local authorities submitting their outturn expenditure information promptly. I believe that the Government and local authorities can work together to ensure that the grant to which local authorities are entitled on the basis of their spending is paid to them as early as possible.
Hon. Members may reasonably ask why we are making a second supplementary report in respect of 1983–84 at this juncture. There are two reasons. First, the Government's financial management has succeeded in bringing down interest rates faster than we expected, local authorities have been overpaid grant in relation to the current financial year. It is therefore necessary to adjust grant entitlements to reflect the latest assessment of interest rates. Secondly, the House faces the prospect of three further supplementary rate support grant reports in the summer, to which I shall refer briefly in a moment, and all hon. Members may agree that there is advantage in dealing with one now to avoid having four in the summer.
Hon. Members may ask why we are not yet making the second supplementary report. The hon. Member for Blackburn (Mr. Straw) will undoubtedly ask. We have been closeted for a number of weeks in the Rates Bill Committee, in which we work by a process of telepathy, so that we do not need to—

Mr. D. N. Campbell-Savours: Are we to get copies of the Minister's book?

Mr. Waldegrave: I should explain, for the benefit of the assembled masses, that the hon. Member for Workington (Mr. Campbell-Savours) was referring to copies of my book, which was much quoted in the Rates Bill Committee. As stocks seem likely to remain high for an indefinite period, rather like some of the stocks in the nuclear plant to which the hon. Gentleman and I refer from time to time, I shall be happy to send him one with my compliments.
The second supplementary report for 1982–83 will revise local authorities' grant entitlements to reflect their outturn expenditure. The reason why we have not yet made the report is that we believe that grant entitlements should not be adjusted to reflect outturn expenditure until the Department has received audited information for the great bulk of total expenditure. The returns that we have so far account for only about 53 per cent. Moreover, we would not want to make a supplementary report when numbers of audited outturn forms are being returned to the Department each week.
There is another reason. When we come to make the second supplementary report for 1982–83 in the summer it will entail paying some £100 million grant to the Greater London council. The GLC is eligible for the grant because its outtum expenditure is a staggering £177 million less than its budget for 1982–83, showing the customary financial efficiency of that authority under its present regime. It made a complete nonsense of its planning for that year. Because the total of block grant is cash-limited, all other local authorities will contribute to the GLC's £100 million gain. We have delayed making the report, to enable authorities to take account of that contribution in setting their rates for 1984–85. We have now given them notice of the change. Treasurers have known of the situation for some months now.

Mr. Robert Rhodes James: When my hon. Friend is not binding the leviathan of the GLC and arranging for £100 million to go to it, will he think for a moment of the misfortunes of the people of Cambridgeshire?

Mr. Waldegrave: Hon. Members representing Cambridgeshire, Huntingdon and other neighbouring


counties, some vociferously and others with a silent prayer, make their concerns well known. I accept my hon. Friend's point and recognise the problem faced by authorities as the block grant is cash-limited. When an authority makes a hash of its affairs, as the GLC did in that year, that presents subsequent problems for other authorities. When the system was set up, no one conceived that an authority could miss its budget by £100 million.

Mr. Jack Straw: If, for example, the Government had produced a public sector borrowing requirement of about £5,000 million under their estimate, surely the Prime Minister would applaud the Government's good housekeeping, not their rashness.

Mr. Waldegrave: When the hon. Gentleman worked for the right hon. Member for Bethnal Green and Stepney (Mr. Shore), he became exceedingly learned in these matters. He will be able to explain to the House how the public sector borrowing requirement is the residuary of two large numbers. The GLC managed to miss its target by a high proportion of its total budget. A comparable example would be for the Government to miscalculate the PSBR by about £25 billion, not £6 billion.
I promised the House a trailer for the three supplementary reports, which the Government propose to make in the summer. I have already mentioned the second supplementary report for 1982–83, to adjust grant so as to reflect local authorities' outturn expenditure. There will also be a first supplementary report in respect of 1984–85, to ensure that grant entitlements follow authorities' formal budgets, which we shall receive after the grant year has started in April-May, and to implement holdback of grant as necessary in the light of those budgets. Finally, there will be a fourth and final supplementary report to close the books in respect of 1981–82.
From what I have said, the House will realise that the report that we are debating tonight is modest. As the Secretary of State is bound to do, we consulted the local authority associations about its proposed content last month, and they raised no objection.
Since we are having this debate in March, the House would be surprised if I fail to mention the prospects for rate levels in 1984–85. The newspapers have been full of reports in recent weeks about individual authorities' rating decisions. First, however, I invite the House to look back at what local government and the commentators were predicting at the time of the rate support grant settlement shortly before Christmas. The headlines were of a "Shock Horror" nature. "Hefty rate increases expected" said The Guardian. The Financial Times said:
Sharp rises in rate bills predicted by local councils.
The Daily Mirror said "Tories drop rates bombshell". The Association of Metropolitan Authorities was as forthright as ever, and said:
the Government is creating a rates crisis that will hit ratepayers in towns and cities throughout the country. It will fuel inflation, enrage ratepayers, and threaten crucial services".
The Association of County Councils was reported to have predicted rate increases far in excess of inflation, and major cuts in essential services. The hon. Member for Copeland (Dr. Cunningham) predicted:
a major increase in rates that will be well above the rate of inflation.

Individual authorities joined the chorus. The finance committee chairman of Greater Manchester issued a press notice claiming that the Government were presenting his authority
—along with scores of other councils—with an impossible housekeeping problem.
He forecast an increase of 28 per cent.
just to stand still on services.
I invite the House to consider the relationship between the predictions and the reality. In fact, the chairman of Greater Manchester's finance committee has eviaently solved the impossible housekeeping problem: his council has now decided on a precept increase of just 4 per cent. next year, and apparently boasted that it had done so without hitting manpower or services. This is but one of the death-bed repentances sweeping the metropolitan counties and the GLC, whose abolition we shall bring before the House in due course.
The West Midlands county council has gone for a zero precept increase. The GLC has even managed a reduction—although it is something of a con trick. It could and should have been much larger, since it overrated in previous years. In the event, Cumbria's precept is set to rise by 4 per cent., Avon's by 6·5 per cent. and Northumberland's by 5 per cent. All that shows what can be done when the will is there.
The general picture is now almost complete. Only a handful of authorities, albeit large, have yet to reach final decisions. On the basis of the returns we have, we can be fairly confident that the average rate increase in England next year could be less than 6 per cent., not even one percentage point above the current inflation rate. It will be the lowest figure since the reorganisation of local government undertaken by the Government of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).

Mr. Campbell-Savours: Why should that rate of increase be higher than the forecast wage increases in the public sector?

Mr. Waldegrave: Wage increases amount to 65 per cent. of the total cost of authorities. I agree with the hon. Gentleman that it is a perfectly good question to ask of any local authority which has put up its rates by more than the average cost of its wage bill. It is perfectly fair to ask how it is that other expenses increase faster than the wage bill. The hon. Gentleman and I often agree on such matters. It would be a good test of the efficiency of local authorities, and the relationship between their increase in expenditure and their average wage bill. That would be worth exploring.

Mr. Campbell-Savours: Perhaps the Minister misunderstood what I was getting at. Why should those increases be any greater than the increases in wages which can be expected by the consumers who work in the public sector?

Mr. Deputy Speaker (Mr. Paul Dean): Order. We are beginning to get a little wide. This is a fairly narrow report and it would not be appropriate to debate local government finance generally or, indeed, to discuss future years.

Mr. Waldegrave: I believe, Mr. Deputy Speaker, that it is partly my fault that we have widened the debate. I can perhaps pursue the matter with the hon. Gentleman subsequently. We have had a certain amount of crying


wolf from local authorities in the past year. We must remember that when we hear wolf being cried in other areas.
At the time of the settlement, before Christmas, we said that if local authorities met their expenditure targets average rate increases should be low, and they have been. The remarks were greeted with derision when we predicted what has now happened. Commentators have been driven to say that we are embarrassed by the low figures. If that is embarrassment, please let me have more of it.
Even including the GLC and ILEA, the total of local authorities' budget for 1984–85 is likely to be only 2·5 per cent. above the corresponding figure for 1983–84, which is a pretty remarkable performance. It is below the expected rise in prices over the same period. Up and down the country municipal minds are being concentrated, and the best is yet to come.
The rate support grant supplementary report is a relatively automatic part of the whole machinery of the rate support grant, whose objective is the maintenance and support of the Government's central economic strategy of seeking ever greater efficiency from all the great state institutions. I quote the rate and expenditure figures for 1984–85 to show that for all the stresses and strains, all the justifiable comments and all the improvements that we must still seek, the basic strategy of slowing the growth in local authority current expenditure is now beginning to work. That strategy, of which the report is but a small cog is alive and well. I commend the report to the House.

Mr. Jack Straw: It is an entirely unexpected pleasure to be replying to the Under-Secretary. I am not sure whether the adjective "closeted" is correct, but we have been thrown together for 30 or more sittings on the Rates Bill, so his words are familiar to me; as I dare say mine will be to him. He kindly offered my hon. Friends on the Committee copies of his book "The Binding of Leviathan", which I think we have used to great effect against the Government's justification for the Rate Bill.
I am looking forward to my autographed copy of that book, which I have not yet received. Perhaps that is my punishment for having dared to raise the matter in the first place.

Mr. Waldegrave: I assure the hon. Gentleman that a copy is on the way so he can refresh himself with the arguments that I deployed, which I think are unanswerable, as to why the Labour party is in terminal decline.

Mr. Straw: It is proof of the wisdom of the Under-Secretary's views, which were expressed in 1977, that we have weighed his words with care. Apart from a minor hiccup at the 1983 election, far from being in terminal decline, we are re-invigorated; that will be proved to the discomfiture of many Conservative Members at the next election.
One of the points made by the Under-Secretary related to the dangers for parties in departing from their principles. The great dangers in that, are all too apparent in the government's present policy towards local Government finance, as the right hon. Member for Daventry (Mr. Prentice) has warned his party only too well. A party which is committed to, and was formed out of, the idea of local democracy, based on the principle that

power should be decentralised and that too much government is bad—notions of the diffusion of power—is sowing the seeds of its own destruction when it takes upon itself more centralised power than we have seen during peacetime in the 20th century.

Mr. Barry Porter: Rubbish.

Mr. Straw: The hon. Member says "Rubbish", but there are many wise—

Mr. Simon Hughes: He always says that.

Mr. Straw: He does not always say that. He was so confused by the speech of the Under-Secretary that he was sitting there with his eyes gradually narrowing. I think he found it even more confusing than the Chancellor's elucidation of the difference between M1, M3, PSL2 and MO during the early part of his Budget speech, an elucidation which had even the Secretary of State for Industry completely foxed.
I have not on this occasion come armed with the full texts and prophetic notions of the Under-Secretary but I would refer him to "The Binding of Leviathan", which—

Mr. Porter: I bought it.

Mr. Straw: There is a man who thought the market was going up when it was going down. If only he had sat on his hands and taken proper account of the nature of the market, he would have been able to get a remaindered copy cheap or, if he had sat on his hands even longer, he could, like the rest of us, have benefited from the largesse of the Under-Secretary. However, I ought to say that this largesse is being reciprocated with autographed copies of that excellent work, "Putting Blackburn Back to Work".
The Under-Secretary referred to the forecasts of rate increases which are likely this year. The relevance of the increases to this report is that the Under-Secretary was claiming that the lower rate increases have arisen because of the Government's policy on local government finance. I think the Under-Secretary speaks with forked tongue. He condemns local authorities when they put up the rates above the level of inflation; he then seems to condemn local authorities when they put up the rates by an amount below the level of inflation. He cannot have it both ways.
If the hon. Gentleman is not speaking with forked tongue, we must accept that he is commending Labour Avon county council, in which county his constituency lies, for putting up its rates by only 5·5 per cent. arid that he is commending Cumbria for putting up its rate by only the level of inflation. I hope that he is commending the noble county of Lancashire; its rate is to go up by 7·7 per cent. but over half that increase is due to cuts in rate support grant and not to levels of expenditure. I hope too that he will condemn thoroughly the Conservative-controlled district council of Torbay, which is putting up its rates by 20 per cent., and the adjoining authority of South Hams, which is putting up its rates by nearly 30 per cent., as I discovered when I visited that area only three weeks ago.

Mr. Simon Hughes: What is Liverpool going to do?

Mr. Straw: What Liverpool will do is an interesting question. I am sure that you, Mr. Deputy Speaker, would rule me out of order, were I to seek to answer, much as I would wish to. Should the Government decide to provide


time for a debate on Liverpool, we should be delighted to participate. More to the point, if the hon. Member for Liverpool, Mossley Hill (Mr. Alton) believes that Liverpool has such a fine record over the last 10 years, I suggest that the Liberal party uses one of its Supply days, with which it is amply provided, to mount a full debate on the record of Liverpool, which has brought the council to such a state of financial crisis.

Mr. Simon Hughes: I look forward to the excess number of Supply days which we will get to debate this matter, because it might at least allow people outside the House the opportunity to understand the rate support grant supplementary report, as well as give us an opportunity to put some of the arguments that we otherwise do not have time to put.

Mr. Straw: I am sure that both Conservative and Labour Members would agree that Liberals whinge on almost any excuse. They have many more Supply days than they deserve. One of their Supply days should surely be devoted to the Liberal record in Liverpool, that being the principal factor that has brought the city to its current financial crisis.

Mr. Robert B. Jones: What about the Liberals' attendance record here?

Mr. Straw: I am glad to hear the hon. Member for Hertfordshire, West (Mr. Jones), fresh from smiling at me when I recommended the rerating of agriculture to the Standing Committee, asking about the Liberals' attendance record here. It is a good question. I should point out that the question that is asked in Rochdale—the alternative, as it were, to the question that we are often asked—is not, "Why are you not in your constituency?" but, "Why are you not in Westminster representing our people there?"

Mr. Robin Maxwell-Hyslop: There is an interesting point in connection with the Committee considering the Rates Bill today. Is it not true that the Liberals voted for the rating of agricultural land this morning?

Mr. Deputy Speaker: Order. This debate is ranging very wide. I hope that the hon. Member for Blackburn (Mr. Straw) will not be provoked into going off into highways and byways that have nothing to do with the debate.

Mr. Straw: I would never be provoked, and I am sure that, had a point of order been put to you, Mr. Deputy Speaker, you would have said that how the Liberals or anyone else voted is a matter for the record. No doubt, Hansard for the Committee will be available tomorrow, and I am sure that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) will be the first at the Vote Office to get a copy, hot off the press, to check on the Liberal voting record on the Rates Bill. I hasten to add, however, that the vote was not on the introduction of the rerating of agriculture but on the more modest proposal to introduce a report on that proposition.
As the Under-Secretary said, the scope of the second supplementary report for England is limited. It implements the effects of changes in interest rates between the rate estimated at the time of the original settlement and the revised estimate in the rates for 1983–84. I turn to page 1,

paragraph 4, of the report. I give that information for the benefit of my three hon. Friends the Members for Worsley (Mr. Lewis), for Burnley (Mr. Pike) and for Knowsley, South (Mr. Hughes), who I know are following this with great assiduity, and who I know are anxious about their reselection, because the constituency parties are thinking of nothing but the Rate Support Grant Supplementary Report (England) (No. 2).

Mr. Allan Roberts: Is my hon. Friend aware that not only his hon. Friends are following the matter with great interest, but also the electors in Bootle? In fact, all the electors in the Sefton metropolitan district authority are following it with great interest. That Conservative-controlled authority, which I have described before as a paragon of underspending virtue, lost nearly £2 million in rate support grant this year from its own Conservative Government, and is likely to lose even more money now as a result of this settlement.

Mr. Straw: As ever, I am grateful to my hon. Friend the Member for Bootle (Mr. Roberts), to whom I defer. He is the chairman of the environment committee of the parliamentary Labour party and he is an expert on these matters.[Interruption.] I know that he has almost learnt this report by heart, including the many tables on multipliers in annex 4.

Mr. Roberts: When my hon. Friend said that I was chairman of the parliamentary Labour party's environment Back-Bench group, Conservative Members seemed to be disparaging. However, the Secretary of State quoted our minutes regularly in the Committee considering the rate-capping proposals. So at least he treats us seriously.

Mr. Straw: That is quite true. In fact, we are conducting our own leak inquiries to discover who has been leaving around copies of our confidential minutes. It is one thing for Civil Service officials or for Ministers to leak minutes, but it is quite another matter when Opposition minutes are leaked. That is much more reprehensible.
As I was saying to my three hon. Friends, they will know that the gravamen of this report arises because the estimated interest rates paid by local authorities have been reduced from 11·5 per cent. to 10·85 per cent. for 1983–84. I am glad to see that my hon. Friend the Member for Knowsley, South, whose constituency party made an excellent choice, if I may say so, is nodding in agreement.

Mr. Porter: I am delighted to help the hon. Gentleman, as I am one of the few people who have actually been ruled out of order once today and have bought my hon. Friend's book, which I found incomprehensible after the second chapter. I also find it incomprehensible, speaking on behalf of the ratepayers of the Wirral district council, when Wirral has been a paragon of virtue, following Government guidelines, both Labour and Conservative. I have received some letters from the Department that my hon. Friend represents which are as incomprehensible as his book. It would appear that this report today will make me even more bewildered about what is likely to happen to those people who try to run a tight ship, as far as expense is concerned. The tighter the ship, the less one gets. Perhaps the hon. Gentleman will tell me how I am to explain that to my constituents.

Mr. Straw: I am grateful to the hon. Gentleman. The Under-Secretary referred to what I picked up when I


worked, as he once did, as a hack for the Government—different Governments of course, but a similar function. If I may have the hon. Gentleman's rapt attention for a second, the only thing that I learned about the rate support grant when I was at the Department of the Environment is that it is like the Schleswig-Holstein question: only three people have ever understood it. One has emigrated, one has died and the third has gone mad. All three are to be found incarcerated in Marsham street. It is a capricious system which often produces quite unintended effects, which is why the hon. Member for Cambridge, (Mr. Rhodes James) was complaining about the effects that the system has had on Cambridge. It is also why, when one part of it is pushed—it is like a sausage-shaped balloon—another part pops up.
The Under-Secretary again is trying to have it both ways. When the Greater London council anticipated, partly because of its forecasting of the habits of the travelling public in London, that the level of expenditure in London would need to be, as it turned out, £170 million higher than it thought, it was roundly condemned by Conservatives for alleged overspending. Now that, for reasons that I shall detail shortly, the council has spent £170 million less than it thought and is, therefore, within grant and very much closer to the Government's target, the Under-Secretary condemns it again.
The problem for the hon. Gentleman is that he and the Government were really very pleased when the Greater London council went so far above its target as to come outside grant altogether, because that meant that there was more grant for Conservative authorities; he wept crocodile tears when he complained about the Greater London council's budgeting. Now that it has come back into grant and has apparently been a good boy, it means that, because grant is cash-limited, the amount allocated to other authorities will be reduced. The blame for that lies not at the door of the Greater London council but at the door of the Government for cash-limiting the rate support grant in the way they have and for adopting the present formula.
Before I embarked on this small digression—

Mr. John Maples: Is the hon. Gentleman suggesting that the rate support grant should not be cash-limited?

Mr. Straw: No, I was qualifying what I said by talking not only about the fact that it was cash-limited but also about the formula that was applied. I certainly do not believe, however, that it should be cash-limited with the rigidity that the Government suggest. I also believe—I hope that the hon. Gentleman for Lewisham, West will share this view—that when an authority such as the Greater London council which is condemned for overspending and going outside grant, turns out, for perfectly legitimate reasons, to have spent far less than it thought, and a sum much closer to the Government's target, it should be the subject of approbation by the Government.
The Government should explain to authorities that have been gratuitously penalised by the fact that the GLC has underspent that that is the result of the operation of the rate support grant system that the Government have constructed, and not a result of decisions taken by the GLC. The money that other authorities, including my authorities of Lancashire and Cumbria, will lose is money

that they would not have had in any event had the GLC spent near target or within target when it first decided to budget.
As my hon. Friends on the Back Benches will say, reducing the estimated level of interest from 11·5 per cent. to 10·85 per cent. will mean that authorities in England will lose more than £44 million, or 0·7p in rate poundage terms. We make no particular point, as the proposed reduction is a result of the welcome reduction in interest rates. However, we complain that the Government do not show the same alacrity in bringing forward reports that reflect increases in local authority costs as in bringing forward reports that reflect decreases in costs. It is a matter of great regret that they have not used the opportunity of this report to do a number of things that they could have done.
First, the report does not make any changes to the grant-related expenditure assessments. This means, for example, that allowances for debt charges are still based on estimated capital allocations instead of actual ones, although the actual ones, as the Under-Secretary will accept, have been known for almost 12 months. This and other changes have not been made, and as a result there will be a continued mis-allocation of grants between local authorities until at least next year, when the next supplementary report for 1983–84 is planned.
The Under-Secretary did not explain satisfactorily why it is not possible for the GREAs to be changed to reflect actual capital allocations rather than estimated ones. I hope that the Under-Secretary will deal with that, as well as my other points. I hope that he will deal with the 20 per cent. or 30 per cent. increase in Torbay and South Hams.
Certainly the report does not grant any additional disregards for spending against target. All hon. Members, especially those who wish to reflect the concern of their local authorities, know that authorities continually complain that they have forced upon them national decisions over which they can have no control. These are not reflected in the GREAs or in the targets imposed on them.
One good example is that of police pay. This is negotiated nationally, and there is nothing in practice that local authorities can do about it. It would be wrong if they were to be penalised for increases in police pay above those estimated when the RSG settlement is made. In fairness to the Government, they have accepted in principle that the final RSG settlement should reflect the increase in police pay above that anticipated when the RSG settlement for 1983–84 was approved by the House in early 1983. The Home Office wrote to the official side secretary of the police negotiating board on 18 July as follows:
For 1983–84, the total of relevant expenditure and the block grant cash limit will be increased to take account of the cost of the police pay settlement in excess of the amount already allowed in the RSG settlement"—

Mr. Porter: What does that mean?

Mr. Straw: It means what it says. The total relevant expenditure is more or less what local authorities spend, and the total of what local authorities spend is a matter of arithmetic. If the hon. Gentleman wants a precise definition of "relevant expenditure", he will have to look in section 56 of the Local Government, Planning and Land Act 1980. I think that what I have read, by the standards of officialese from the Department of the Environment, is pretty clear.
The letter from the Home Office went on:
If representations are made by a local authority association or a local authority, the Government will ensure that no local authority incurs grant abatement because of the additional expenditure due to the pay award.
"Grant abatement" means penalty as a result of a county authority's increasing its expenditure above its target to take account of this pay award, for which it has no responsibility.
This report was an opportunity to honour that pledge by the Home Office, and I hope that the Under-Secretary will explain why the opportunity has not been taken.
There are other disregards which could have been granted in this report. It is known to at least some hon. Members that increased expenditure on urban programme schemes is disregarded for partnership and programme authorities, but is only disregarded for those two categories of authority that take part in the urban programme and not in respect of all the many other authorities that also take part in the programme. Nor is it disregarded for those schemes where urban aid grant is no longer paid and the local authority is expected to find the full cost of the scheme plus grant penalties.
One of the continuing complaints of urban authorities is that their rate support grant, their main programme grant, is reduced, but then the Government say they are a deprived area and will be given urban programme money or other money from special central pools. That is all right—we are pleased for at least a few crumbs from the Secretary of State's table—but the problem for the authorities is what happens when the special grants under the urban programme and partnership schemes run out and the authorities have to pick up the tabs from their mainstream and mainline expenditure. In those cases, at the moment, the authorities do not receive any disregards in respect of those schemes.

Mr. Anthony Beaumont-Dark: It is not a closely kept secret that I have not always agreed with the Government's local government policy. Indeed, only a couple of hours ago we finished an interesting debate. Much as it may have increased personal friendships, it has not increased my regard for the Bill. Would the hon. Gentleman agree that this particular matter is one of those time-honoured systems whereby, had the interest rates gone up, there would have been an automatic ratchet system whereby more interest would have been received? As interest rates have gone down, because of an excellent Budget and an excellent economic situation, this money automatically comes away. Is not the hon. Gentleman spoiling a good case on one Bill by trying to say something entirely irrelevant on this issue?

Mr. Straw: I am chastened by the suggestion by the hon. Member that I am saying something irrelevant to this report. I do not know how I can continue with that.

Mr. Beaumont-Dark: If I have hurt the hon. Gentleman's feelings, I withdraw.

Mr. Straw: I will forbear to continue, not least for reasons which had better not be mentioned in polite company across the Floor of the House.
I said—and I am sure that the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was listening with rapt attention—that I took no point on the

claim by the Under-Secretary that rate support grant ought to be reduced by this amount as a result of the anticipated reductions in interest rates. We believe that the Goverment have not shown the same alacrity in reflecting increases in costs which local authorities have had to bear, through no fault of their own, in rate support grant supplementary reports.
Secondly, authorities have benefited by the reduction in interest rates but they have been penalised by the increases in police pay. Some authorities have been penalised by increased expenditure on the urban programme and inner city programmes. Many of those authorities have not been allowed disregards by the Secretary of State while having their grant reduced to take account of reductions in costs which flow from the reduction in interest rates.
As the Secretary of State announced in the rate support grant settlement for 1984–885, he has granted a new disregard for increased expenditure on schemes that are jointly financed by local authorities and area health authorities. The right hon. Gentleman could have used this report as an opportunity to backdate the relief to 1983–84, but he has not chosen to do so. That is the third matter to which I hope the 'Under-Secretary of State will address himself.
Fourthly, the report does not take account of changes in local authority expenditure levels since last year's Budget. I understand that in two months' time, revised estimates would have become available. If the Secretary of State had waited until then, he would have been able to restore penalties, or the sums that were taken away by penalties, to authorities which reduced their expenditure from their anticipated budget levels. As a result of the supplementary report, authorities which have been wrongly penalised because their budgeted expenditure was considerably in excess of their outturn will probably have to wait until June 1985 to restore their grant for the year ending March 1984.
The final issue that I wish to raise was answered in advance by the Under-Secretary of State. It concerns the curious fact that this is a second supplementary report for 1983–84, yet it is being debated before the second supplementary report for 1982–83. The Under-Secretary of State, as candid as ever, said that the reason for the leapfrogging is that the second supplementary report for 1982–83 would implement the £100 million addition to the GLC's resources because the GLC has budgeted much closer to its target than was originally expected.
I understand the paranoia of Conservative Members about the Labour-controlled GLC. That paranoia is reflected in the abuse and vitriol which poured forth from the Secretary of State for Trade and Industry when addressing a rag-bag of representatives from assorted Conservative associations.

Mr. Beaumont-Dark: Tut, tut.

Mr. Straw: The hon. Gentleman may "tut, tut" but I hope that some of the Conservative representatives "tut, tutted" as they listened to the abuse of the political process by the Secretary of State. The right hon. Gentleman will always reduce any debate to its lowest possible level and get out of the gutter through the sewer whenever the opportunity arises.
As two Conservative councillors on the GLC said yesterday, the real reason why the Government dislike the


GLC is that a Labour group is in control and is implementing faithfully policies which have the support of the majority of Londoners. It seems that they are not concerned about the GLC spending at a different level or having different policies. If Conservative Members wish to challenge what I have just said, and are confident that the GLC's policies do not have the support of Londoners, why are they abolishing elections in London and denying Londoners the opportunity to have their decisions and choices put to the vote? Why are they not putting their judgment to the test as well?

Mr. Beaumont-Dark: While I understand the hon. Gentleman's worry and concern, Mr. Ken Livingstone, if I may say so, has had more ego trips on other people's money than anyone since Genghis Khan. Would the hon. Gentleman not agree that it is not that one wants to abolish the GLC, because it is there, but that there are some people in such great authorities who look upon them as vehicles for building themselves up as people more than as a service to the people by whom they were elected? Ken Livingstone, therefore, has not just become a bogey for us; he has become a menace to the hon. Gentleman, and to the future of local government.

Mr. Deputy Speaker: Order. We must not debate legislation which is not yet before the House.

Mr. Straw: I am grateful to you for that direction, Mr. Deputy Speaker.

Dr. Keith Hampson: This is specific, because the hon. Gentleman has been so selective. The point he makes about the GLC is extraordinary. As I understand the comments of my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), under this report the GLC will gain the sum of £100 million. I agree with my hon. Friend, therefore, that other local authorities will be asked to contribute and will have this sum deducted in order for it to be paid back to the GLC. The GLC managed at long last to spend £100 million less than its budget—what it intended to do—and it seems to me very positive. That is the reason for the report. I would have thought it was just as appropriate not to single out the GLC argument which my hon. Friend put forward. The argument for doing this is that, so far, the Government have had 53 per cent. of returns from local authorities; that is why they cannot at this point bring in the supplementary report for 1982–83. It is a much more reasonable argument and explanation than the hon. Gentleman is trying to put forward.

Mr. Straw: It was not I who singled out the GLC in the first place, but the Under-Secretary of State, who is very sensitive to criticism on this point—and rightly so. I speculate about what would have happened if the reverse had been the case and if, as a result of changes in local authority budgeting, the GLC had been due for a £100 million deduction from its rate support grant. I wonder whether there would have been all this delay then if the shire counties, instead of losing grant which is rightly the GLC's, were going to gain grant. I rather fancy—I am glad to see the Under-Secretary of State smiling, I think in potential agreement with the point—that, if the boot had been on the other foot, the second supplementary report for 1982–83 would already have been presented to, and passed by, Parliament, with £100 million taken out of

the pockets of the GLC. The truth is that, as with all other policy decisions of Government in relation to the GLC, this decision is motivated by political spite, and not by proper consideration of the merits of a great city.

Mr. Waldegrave: The money belongs not to the GLC, but to the ratepayers of London, from whom the GLC took it under false pretences.

Mr. Straw: If it belongs to the ratepayers of London, all the more reason why it should be given to the GLC, so that it can hand it back all the faster. It certainly does not belong to central Government, who have been sitting on it for nearly three years.

Mr. Cecil Franks: Will the hon. Gentleman accept that two thirds of the ratepayers are totally disfranchised in the present system, and that 33 per cent. of ratepayers—roughly the number paying domestic rates in the metropolitan counties—have 100 per cent. of the vote? In the same way that we lost the British colonies in America, the colonies in London will be lost.

Mr. Straw: I doubt very much whether you, Mr. Deputy Speaker, would approve if we debated a major part of the Rates Bill, which is what gives business men the vote. I note that an awful lot of business men are represented in the Conservative group of the GLC, and that Lancashire county council is packed full of business men. There are more business men on Lancashire county council than any other occupational group. It is arrant nonsense to suggest that business men do not have votes.
On the strength of the hon. Gentleman's argument, I look forward to his either supporting the re-rating of agriculture or proposing that votes should be taken away from farmers.

Mr. Franks: Can the hon. Gentleman confirm whether ICI has a vote? Can he confirm whether Marks and Spencer has a vote, whether Lewis's or any of the other major ratepayers have a vote? Does he accept that a company such as Lewis's in the city of Manchester can pay £2 million in rates yet not have one vote? That is the equivalent of 15,000 families with an average rate of about £400.

Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will resist the temptation to go very wide.

Mr. Straw: Sir Derek Rayner has a vote, as far as I know, and so does every employee, director and shareholder of Marks and Spencer. Mr. Harvey-Jones, the chairman of ICI, has a vote. Are Conservative Members suggesting that Sir Derek Rayner and Mr. Harvey-Jones should have two votes?

Mr. Christopher Hawkins: We are not suggesting that some people should have two votes, but that—

Mr. Deputy Speaker: Order. I have already ruled that this matter is wide of the debate. I must ask the House to come back to the subject of the report, which is comparatively narrow.

Mr. Straw: As I was saying before I was diverted by Conservative Members who are anxious to use the debate to press their case for two votes for business men in a most disorderly way, the Minister argued that we cannot have


a second supplementary report for 1982–83—which is leap-frogged by this report—because of lack of information about the full effects of the draft 1982–83 supplementary report which was circulated to all authorities on 3 February. We do not believe that that argument carries much weight. It would have been possible for the Secretary of State to bring that report

forward in about one month and have laid this report to take account of the disregards and increases in costs on local authorities that I have already mentioned and the reduction in costs that flow from the reductions in the level of interest rates.
My hon. Friends the Members for Newham, North-West (Mr. Banks) and for Liverpool, Broadgreen (Mr. Fields) may want to comment, so I shall bring my brief preliminary remarks to a close.

Mr. John Maples: I do not intend to follow the hon. Member for Blackburn (Mr. Straw) down the various pathways of the Committee that is considering the Rates Bill. I shall bring the debate back to just one aspect of the report. My remarks will be more in the nature of a question than a speech as I do not fully understand the report and hope that I can get from the Minister an explanation of its effects. If the hon. Member for Blackburn is right and there are only three people in the world who understand the block grant system, I can only hope that the Minister is one. I used to think that the hon. Member for Blackburn knew something about these matters until I discovered that he was expert on the system for everywhere except Lewisham. Every time that I think that I understand GRPs, GREs, targets and block grant, I have only to pick up one of these reports and read it to discover that I probably do not.
I should like to explore what effect the redistribution of the £44 million will have. In the first supplementary report to the 1983–84 rate support grant, block grant was reduced by £280 million because of a £771 million overspend by some authorities. Although that £280 million reduced the total of the Government's rate support, it came from authorities that were being penalised and had overspent. That was fine as it came from them in proportion to their overspending, according to predetermined formula about which they all knew in advance. In this report we are considering a reduction in block grant by £44 million because of an £84 million notional shortfall in interest or a saving that local authorities are assumed to have achieved. I imagine that that is very close to the figure that they have achieved. One would therefore expect that £44 million to be taken from the block grant for different authorities in proportion, in some way, to their net interest costs. However, it seems that that is not what is happening. The reduction of £44 million is being used to recalculate the grant-related poundages of all the different authorities, and by that mechanism to redistribute the whole £11 billion of block grant. If I am wrong, I hope that the Under-Secretary will explain the true position. If I am right, the impact will be very unfair. Interest charges are not proportional to the way in which the block grant was originally allocated; they are proportional to the debt of the various local authorities. However, the different local authorities will be treated as a category. For example, the inner London boroughs will all be treated together by the use of the same adjusted GRP, which has been increased.
It could be that one London borough had twice the debt of another and was paying twice the interest, and yet that the reduction in the block grant of the two authorities was exactly the same. The local authority with the high interest charges would get a bonus, because its interest payments would have been reduced, while the second local authority—whose interest charges would not have fallen so far because it had smaller debts—would receive the same reduction in its block grant.
We are always telling local authorities to be more efficient. I often join vociferously in making that call. They could and should be more efficient. One aspect of greater efficiency and better management control in local authorities is the implementation and enforcement of a budget. If an authority is to produce a budget, it must know about the external factors that are operating on it. It is not

reasonable to change those external factors more than is absolutely necessary during the course of a year. However, if I am right about the redistribution, the adjustments will bear very little relation to the saving achieved by the different local authorities. The benefits and penalties will be somewhat arbitrary.
I suspect that my understanding of the situation is correct, and I hope that the Minister will explain why the system has this effect and whether it could be changed.

Mr. Simon Hughes: My neighbour across the borough boundary, the hon. Member for Lewisham, West (Mr. Maples), has raised one of the many issues that will be relevant in the accounting and financial context within which local authorities will have to work as soon as they receive news that the report has been approved by Parliament.
As the Under-Secretary has announced, what we are discussing is the second supplementary report in relation to the past year. It is an interim report designed to deal with an additional factor which is not to be provided for in the normal sequence of reports which we are to receive in the future. The report caters simply for the change in interest rates.
The hon. Member for Lewisham, West has rightly pointed out that the report takes authorities in each grouping together for the purposes of rate support grant and of all the other factors which determine central Government financing of local government, and treats them all equally. It deals with the change in interest payments and therefore the reduced amount of rate support grant generally available by cutting up simply according to category and dividing the amount that the Government are clawing back between groups of local authorities.
This morning I received the rate demand from my own local authority for the coming year. The authority had set out, as it is now bound to do, exactly how the figures were arrived at.
One change in the coming year's grant-related expenditure, which affects the whole of budgeting and, therefore, the rates each Southwark resident pays, is the Government's different assessment of interest charges. It is always difficult for local authorities to know at the beginning of the year the exact changes in GRE, because they do not receive the full report until later. Southwark has been told that its assessment will be reduced because of interest charges. Why can there not be a catching-up operation, which will correct something that has happened?
I take the point made by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) that we are doing a ratchet job on an overall financial change. We should consider a catching-up operation rather than a supplementary report on the GRE—if we must have such a horrible beast governing local authority finance—for the following year. Why can we not take account of changes in interest rates from one year to another? Local authorities would then at least know the factors affecting the amount of money they will receive from the Government. They could budget in advance rather than look over their shoulders while they are unable to complete their audit accounts for the past year.
I welcome the timetable proposals because they will at least be a marginal improvement on the present system whereby reports often are presented at times unrelated to


each other. Local authorities can close their books some months after the end of their financial year. It is vital that this occurs as soon as possible. It would be sensible if balancing measures for different years took into account assessments for future years. That would be better than protracting and delaying the settlement of local authority finances for 18 months or two years after the end of the financial year under consideration. This technical point deserves comment. If the Under-Secretary of State cannot say that we should examine this matter now, I hope that he will at least say that he will consider ensuring that changes in, for example, interest rates can be carried forward. We can, therefore, ensure that local authorities have the advance information they need rather than be required to adjust their books retrospectively.
This aspect reflects a fundamental point. Each day local authorities in areas affected harmfully—that is true of most areas, Tory or Labour—by the Government's local government financing arrangements complain that it is impossible to budget and to plan. They complain of the unclear and muddled changes often imposed halfway through the financial year or imposed retrospectively at the beginning of the next financial year. Local health authorities find the Chancellor's cuts almost impossible measures for which to cater, because they come in the middle of a financial year and alter their budget plans. Local authorities find increasing difficulties, even if they understand local government financing, grant-related poundages, grant-related expenditure assessment and holdback, let alone the proposal for changing the multipliers, to which we have just become accustomed, to a new combined multiplier and another set of changes. The local authorities cannot have any type of budgeted planning, because it will last for only a couple of months. The Government's insistence on upholding this mechanism is a fundamental defect in the system. The Government uphold that defect each time another report is tabled.
The hon. Member for Barrow and Furness (Mr. Franks) intervened to ask the naive, simplistic and undemocratic question: why do businesses not have the same rights as individual citizens in the rate-making process? He asked, to put it another way, why businesses contributed such a large part of the rates. The answer lies in the actions of his party, although he has not always been associated with that party. I believe that he started with the Labour party and changed sides.
For about 10 years the Conservative party has been pretending that it will reform local government finance, but it has not done that. I notice, according to a report in the Daily Telegraph about an inquiry into domestic rates, that the Government are toying with the idea of reviewing ways in which the amazing discrepancy between flat owners and house owners, as reflected in the rating and valuation system, might be tackled.
I urge the Government to get the basics right and to stop tinkering with the edges. They should stop introducing bureaucratic measures such as we are discussing tonight, which create not only supplementary reports but supplementary No. 2, No. 3 and even No. 4 reports, extending for years after the financial year has ended, extending for longer than it takes even Members of Parliament to sort out their budgeting, let alone the time it must take the Prime Minister and the Chancellor to sort

out the nation's budgeting. The Government cannot go on in such a muddled way and expect local authorities to survive, let alone respect a Government who impose such measures on them.

Mr. Franks: The hon. Gentleman said that the argument that business should have a vote represented a simplistic and undemocratic suggestion. So that I may have the benefit of his great experience, will he explain why it is simplistic and undemocratic?

Mr. Deputy Speaker: Order. For the hon. Gentleman to answer that would be straying beyond the terms of the instrument which we are discussing, a point which I have made more than once during the debate.

Mr. Hughes: The point which the hon. Member for Barrow and Furness raised has been argued elsewhere. I accept your ruling, Mr. Deputy Speaker, and I am sure that we shall have an opportunity to debate the issue later in the year when other measures come before the House.
The Minister gave his assessment, based on the latest reports reaching his Department, of the average level of rate increase. It is much lower than we might have expected. But it is considerably higher than any of the figures that he mentioned for all the boroughs in inner London, and for most of the boroughs in London irrespective of the party which controls them.
That applies whether we are referring to the Liberal-run borough of Richmond; Tory-run boroughs such as Westminster or Kensington and Chelsea, which have considerable rate increases for the coming year; or Labour boroughs such as mine in Southwark, which has a rate increase of 16·5 per cent. All of those authorities suffer from a particular disadvantage. Why must all London authorities have such a considerable rate increase this year? I believe the answer to be that their needs are not reflected in any of the criteria that the Government have set out.

Mr. Waldegrave: I hope that I can put the hon. Gentleman out of his agony. There is the argument which he has just adduced, but that is a different one. This year, in particular bacause of a number of changes in the handling of interest receipts and other matters, the share of grants between upper and lower tier authorities—not just in London but outside London as well; this answers the point raised by the hon. Member for Blackburn (Mr. Straw) about Teignmouth and other areas—has been altered in such a way that one must look at the total impact of rates, upper and lower tier together, to get a proper picture.

Mr. Hughes: I accept what the Minister says, but he will have seen the figures and will know that the rate requirement in my borough last year was 116·59p in the pound. Inflation will cater for another lop in the pound this year. Two elements are reflected in the reduction in Government funding, housing subsidy and block grant. Elements such as that eat away at the infrastructure of any inner city borough in London, irrespective of control, because they do not take account of the starting point needs when a higher level of local investment has been adjudged to be necessary by a succession of local administrations, irrespective of party. It is no argument to say that if one adds the GLC, the inner London education authority and the Metropolitan police, they account for the differences,


because most of their precepts have not been increased, and, as we have debated, there was a decrease in the GLC precept this year.
From the supplementary report, it is clear that the most substantial part of the money that the Government allow local government reflects spending on education. It is £9 billion as opposed to a total of £19 billion allowed for the calculation of the rate support grant—nearly half that total. A long way behind, in second place, comes the money for police and environmental services. There is a factor in that calculation for interest receipts. Needs in respect of police, education and other matters vary from year to year, and are different from one local authority to another. Interest rates do not differ in the same way.
I ask the Under-Secretary to make sure in future that at least local authorities can all have in advance a figure to put into their budget balances calculations for interest receipts and interest rates which will allow them to budget for one element with certainty. The Government's policies completely undermine any certainty of planning. All that the report does is to reinforce the feeling that, although technically the report may produce a justified result, it comes in the middle of a series of reports which together result in a bureaucratic muddle that the Government do nothing but compound by each report that they introduce.
We need a new start, and three phased reports in future are a beginning, but nothing like sufficient to relieve the enormous bureaucratic burden that the Government and their predecessors have imposed increasingly on local authorities in England.

Dr. Keith Hampson: I hesitate to start with the thought that the debate has a feeling of déjà vu. It sounds pretentious to say that, having been 10 years in the House and having attended many rate support grant debates, I have heard it all before. The hon. Member for Southwark and Bermondsey (Mr. Hughes) made a great cri de coeur about three supplementary reports. The hon. Member for Blackburn (Mr. Straw) belaboured the same point, asking why we are having this report before we have dealt with last year's. Superficially, there is an absurd logic about that, but that is the nature of the business that we are in. It has always been like that.

Mr. Allan Roberts: Have not the Government started a new tradition of introducing rate legislation and rate Bills as often as previous Governments used to introduce interim orders?

Dr. Hampson: Without commenting on whether that is so, that is an irrelevant point. Under the old system, when Governments did not introduce changes every year, this still happened. I think that I am right in saying that never in my 10 years in the House have there not been at least three rate supplementary orders each year.
The old system had the same problems. The basic point is that there is no real problem. In a sense the whole rate support grants system is about equity. If anybody is concerned about equity, it should be the hon. Member for Blackburn. Supposedly, that is the kernel of the Opposition's beliefs. Whatever the formula, we are trying in the rate support grant system to even out our resources so that those parts of the country that are more wealthy and have a higher rateable value do not have a disproportionate quality of service compared with those that have low

rateable values. That is what it is all about. It would be easy for a Government to say—I am not saying that when we came into office in 1979, it was not a tempting prospect—"Let us do something simple and try to do something with a broad brush," and to ask, "How much should you give per capita, district against district, county against county?" That is not the nature of the game that this or any other Government have been in. The Government have been trying to find a formula that would produce equity in the distribution of resources.
For better or worse, whether under the present block system of GREs or under the old system of multiple regression analysis, one faces the problem of having supplementary reports and trying to catch up. The hon. Member for Southwark and Bermondsey said that local authorities are looking over their shoulders. That has always been the case. They have always had to look over their shoulders because central Government, whatever the system—under this Government, the previous Labour Government, or with multiple regression analysis or block grant—have always been in the business of clawing back, making adjustments or using multipliers. They have all been part and parcel of the system.

Mr. Nicholas Baker: Does my hon. Friend agree that, thanks to the irresponsibility of councils such as the GLC and this complicated system, there are a number of low-spending local authorities that, under the clawback system, find it difficult to run a competent accounting system?

Dr. Hampson: Local authority treasurers are skilful at telling people like my hon. Friend and me that they do not understand the system, that it is incredibly complex, that they have inordinate problems in bringing down their costs, and that the whole thing is made more difficult by the way that Governments are constantly changing. That is par for the course for almost any council treasurer. We have heard it all before. Treasurers manage perfectly well to understand the ground rules. Their political masters are sometimes relatively ignorant and sometimes they are shrewd.
We all know that when it comes to election year, which is what we face with the GLC and the metropolitan counties, the treasurers and their political masters find the system remarkably straightforward to understand, and can find the cuts necessary to keep their rate increases within tolerable bounds. At other times in the political cycle they find it impossible to do so and there are exorbitant increases. At the moment it happens to be expedient to have low increases. I do not accept that they do not understand the ground rules or the system.

Mr. Simon Hughes: Does the hon. Member accept that, none the less, there could be a simpler way, which would be more acceptable to him and to local authority treasurers?

Dr. Hampson: The hon. Gentleman will have to accept what I say. I spent four years in the Department of the Environment, and I believe that the principles of the GRE system are more understandable than those of the old system.
The hon. Gentleman shakes his head, but there were no truer words than those spoken by the noble lord, Lord Wilson in his heyday when he said that a week was a long time in politics. People have extraordinarily short political


memories. Nothing is shorter than financial memories in local government. People have forgotten the old system. One of the great flaws of the old system, which is why we are here today, is that regardless of what local authorities spent there was an automatic ratchet that ensured that the Government paid out pro rata in accordance with what local authorities spent.
I do not deny that the subject is complex, but since the Government came to office in 1979 they have tried to break away from that system to try to force reality. One of the realities that the Opposition fail repeatedly to understand is that inflation has come down in the past few years and interest rates have decreased progressively.
Opposition Members have been accustomed year after year under their Government to follow the opposite trend, where inflation and interest rates were perpetually going up. Because they have fallen, we can say to local authorities that they have to face reality, that they will not automatically get a Government grant to cover what they have spent, and that they have to accept that pro rata the Government will put in less because local government has fewer overheads and reduced costs.
Whatever hon. Members on the Opposition Front Bench or on the Liberal Benches say about this being confusing and about people not understanding things like multipliers, they understand the system perfectly well. We have gone through it all with the old system and the new. The new system is marginally or, some would say, very much, better than the old. We are dealing with a very simple issue. Because of an adjustment in interest rates we are considering £44 million. All sorts of red herrings have been brought in, such as the GLC and so on.
The question has been raised as to why we are not dealing with the 1982–83 report before the 1983–84 report. The reason is that only 50 per cent. of the audited figures for the previous report have come in. At the end of the day the GLC is the great beneficiary for 1982–83 by £100 million. It is only right that everyone should know in advance, before making decisions, what they will contribute to the finances of the GLC. At long last the GLC managed to cut £170 million off what it had budgeted for, which only goes to show what can be done if there is the will to try.
Apart from all the red herrings, the issue is about £44 million out of what? It is out of £8 billion. That is what we are talking about, despite all the hoo-ha. The hon. Member for Blackburn, who has passion, emotion and eloquence at his disposal, seemed to be extraordinarily ill at ease. I am not surprised, when all he could was marshall the arguments he did to defend his position on this, when it boils down to £44 million out of £8 billion.

Mr. Allan Roberts: I am pleased to follow the hon. Member for Leeds, North-West (Dr. Hampson), because he addressed himself to the issue we are debating—the fact that the Government wish to alter the rate support grant settlement for 1983–84 and to take £44 million off local government. It is a drop in the ocean compared with the moneys that he says local government is spending, £8 billion, and compared with the £10 billion to £15 billion that the Government will spend on Trident alone.

Dr. Hampson: Exaggerating again.

Mr. Roberts: It increases in price as inflation continues, each time the Secretary of State for Defence produces another assessment.
In the statement on the rate support grant settlement for 1984–85 on 14 December the Secretary of State for the Environment said that relevant current expenditure of £20,389 million was about £44 million more than the provisional figure proposed in October. He heralded that as a great gift. That is exactly the amount that is now being taken away from local government. Why is it being taken away? Because of the reduction in interest rates.
The fact that they have managed to reduce interest rates is heralded by the Government as a great achievement. Everybody will benefit. The owner-occupier who has borrowed money will benefit. Industry will benefit because it has borrowed money. However, the Government will not allow local government to benefit. When I was in local government and we were planning for the future, we made assessments about interest rates; if interest rates came down we thought that the public sector would benefit and we could do more. I am sure that business and the owner-occupier say the same thing.
So why does not the Chancellor come back with Budget interim statements to readjust his Budget, take some more money out of the private sector, take it away from industry, and take it off the owner-occupier? The council tenant is no different from the owner-occupier. He pays the interest to the moneylenders in his rent, because part of the cost on housing revenue account is money borrowed by the local authority to build houses. It is in exactly the same position as the owner-occupier who has borrowed money to buy his house.

Mr. John Powley: Does he pay for the repairs?

Mr. Roberts: Indeed he does—in the housing revenue account. The hon. Member for Norwich, South (Mr. Powley) is about 30 years out of date. He does not realise that the Tories are allowing local authorities to make profits out of their housing revenue account, that the cost of debt charges, maintenance and management is less than the money that is collected in rent income these days, and that the council tenant pays for the repairs, maintenance, management and debt charges—as well as subsidising the ratepayers and allowing the Government to claw back from the housing revenue account.

Mr. Straw: Is my hon. Friend aware that, in Torbay, the district council has made so much money out of council tenants that it is using a £2·5 million surplus on its housing revenue account to subsidise the building of a great white elephant of a new conference centre?

Mr. Roberts: I am pleased to have that illustration. The Government are saying, "We will introduce policies that we say will benefit society, as long as they do not benefit the poor and the needy, the people in need of local authority services". Those people will not be allowed to benefit as a result of the Government's so-called success when interest rates go down. Those who benefit will be the private sector, the owner-occupier and the rich—not the poor, whom the local authorities are there to help. That is what this is about—a mere £44 million that is being taken from the people who need it. It is not being taken from Labour councillors—their attendance allowances, the time they put in, or the effort that they make; it is taken from the needy.

Mr. Waldegrave: The hon. Gentleman is making a wonderful speech, but it does not relate to reality. The Government give grants that are supposed to pay for some of the interest charges. Interest charges are lower, so the Government does not give so much grant. I do not see what the problem is.

Mr. Roberts: The Government make all kinds of assessments. If the situation were as simple as the Minister claims it is, that would be fine. However, the Government give grants on all kinds of assumptions, not just on the assumption of interest rates. They give them on the assumption of what inflation will be. Regularly, Governments determine what the rate of inflation will be, what the rate of pay settlements will be, and what the rate support grant settlement will be. They change over the years, but the Government come back only for a justification to claw back more money from local authorities. The Government's assumptions on what pay levels will be in the public sector determine the rate support grant settlement. The Government do not change that.
However, the Government are not having much success. They claim success on inflation and interest rates.

Mr. Franks: rose—

Mr. Powley: rose—

Mr. Speaker: Order. Two hon. Gentlemen are getting up. To which hon. Gentleman is the hon. Member for Bootle (Mr. Roberts) giving way?

Mr. Roberts: I give way to the hon. Member for Barrow and Furness (Mr. Franks).

Mr. Franks: The hon. Gentleman was asked a short time ago whether he would comment on the housing revenue account in Torbay. Will he comment on the housing revenue account in Manchester? When he left that city council, as chairman of the housing committee, the housing revenue account had gone from £200,000 to £41 million.

Mr. Roberts: I do not know what the hon. Gentleman is talking about. He did not say what he meant. If he says that we were building and improving a lot of houses and spending a lot of money and getting a very good HIP allocation from the then Labour Government, he is right. If he is saying that the rate fund contribution to the housing revenue account was relatively high in respect of rate fund contributions from Tory authorities, he is right again, because we did not put the rents up when I was the chairman of housing in Manchester. We were quite proud of all that. But it has all altered now.
I can comment on the housing revenue account of Sefton, with which I am more involved at the moment. In the last financial year, the authority made a £100,000 profit out of council tenants and subsidised the ratepayers of Southport. It helped to contribute to the building of a statue of Red Rum, put fairy lights up in Lord street and things like that—quite an effective way of spending the money of the needy council tenants in my constituency who are unemployed.
The point that I was making, which related directly to the taking away of £44 million, because of the fall in interest rates, was that that is the only factor that the Government are cashing in on. They are not taking account of a higher rate of inflation and pay settlements that are higher than originally expected.
The Government do not take account of the levels of unemployment. They are not having much success in that direction. These falls in interests rates, these signs of an turnround in the economy, are not having much effect on the level of unemployment. As unemployment increases in local authority areas such as Sefton and Liverpool, where the needs of the people dependent on local authority services increase, they do not come forward with a rate support grant settlement to alter that, to give more money to take account of levels of unemployment.

Dr. Hampson: As always, the hon. Gentleman is interestingly selective. How does he justify—he has mentioned the odd example—the fact that in this particular year authorities such as Greater Manchester, which I am sure he lauds, West Yorkshire and other noble Labour metropolitan county authorities have managed to have a deathbed repentance and hold their rate increases so low? I believe that in both West Yorkshire and Greater Manchester the increase is down to 4 per cent. and that in the West Midlands, the Birmingham area, the metropolitan county has actually managed a zero rate increase. If they are capable of doing it this year, why did they not do it last year, the year before or the year before that, when they had 20 per cent. or 30 per cent. increases?

Mr. Roberts: In his speech, the hon. Member for Leeds, North-West pretended to understand the way in which the system worked and how, in relation to grant-related expenditure, grants and so on, local authorities were dependent upon the situation that they had inherited. Wisely, Labour local authorities, where there was a continuity of Labour control in the past, built up reserves and put up the rates significantly in years when they were not facing the electorate—something of which the hon. Member accused them only a minute ago. Those reserves can be used now because of the situation that they inherited; the vagaries of the system that his Government introduced in the last or last but one—or was it the one before that?—piece of rating legislation enable them to do just what he describes.
Liverpool is in a different position. It did not build up any reserves because it had been run by Liberal Tories—mostly Liberals, who are the same as the Tories—and it did not maintain any services but cut them to the bone. Now, because of the pattern of past expenditure in relation to the way that the hon. Member's Government assesses things, it gets no grant and has an inadequate target. That is why it faces a massive rate increase and cuts in the rate support grant, and why the Labour local authorities to which he referred and which have enjoyed continuity of Labour control do not. If he does not understand that, his claim to understand the rate support grant system is bogus.
It is bogus in any event, however, because the hon. Gentleman tried to equate what is happening now with what happened previously, under successive Governments and successive rate support grants. He described the system that used to operate before the block grant was introduced—the needs element and the resources element in the rate support grant—whereby local government decided on a global figure of rate support grant, through negotiation with local authority associations, and then distributed it to local authorities according to a certain formula which took account of resources and needs—a very fair system.
If you had high rateable values in an inner-city area such as Liverpool or Manchester, where office


development used to take place—it still does in Liverpool and to some extent, in Manchester—and if your resources were high in terms of the likelihood of collecting rates, and if you were a town like Bootle, which did not have the same commercial development as its neighbour, Liverpool, or like Salford, next door to Manchester, then the way in which the rate support grant settlement was distributed, through the resources element, took account of that. There was a needs element then, but it is now done in reverse.
The old system, before we got what this Government are doing, took account of the needs of an area and how they were distributed. Now, it is done differently, and the greater the need, the more penalties, clawback and holdback there are, and the opposite is done—which is not fair at all. The assessments by previous Labour Governments were to correct the imbalance and to help the people that we support and represent, not the business men whose votes you want to get in, and for whom you are spending all this paraphernalia, bringing £44 million back from local authorities. It is nonsense.
You only have to look at the circumstances today, where the local authorities are being penalised and being brougth into the penalty box and victimised by the Government. They represent not the overspending, profligate local authorities, but the green pastures of Britain. One or two hon. Members got in by mistake and represent areas with needs, and try to compensate now and again. The local authorities that you want to penalise are the ones that you—

Mr. Speaker: Order. The hon. Gentleman keeps bringing me into this; he must not do that.

Mr. Roberts: The local authorities that the Government want to penalise are the ones with the highest percentage of the under-privileged, of those in need, of the disadvantaged, of people who are homeless, of people—[Interruption.]

Mr. Speaker: Order.

Mr. Roberts: I am delighted with the behaviour of the hon. Member for High Peak (Mr. Hawkins). The more he does that, the better. He is one of the ayatollahs—Tory Back Benchers who have no regard or compassion for those in need, and who are interested only in those whom they were elected to represent. That is what this £44 million clawback is about. They do not understand, as has been clear from their speeches, the system that their Government have introduced or the injustice of it. They are interested only in the result, and the result is that those who have will receive, and those who have not will have it taken away from them, including the £44 million.

Mr. Tony Banks: As I understand it, this supplementary report is not exceptional. It seems to us that the Government are moving rather quickly to reclaim this money. A number of hon. Members, particularly the hon. Member for Leeds, North-West (Dr. Hampson), have asked why we should complain when this report comes before the supplementary report for 1982–83. I can give a good reason why we should be concerned about it. It is that in the 1982–83 report the GLC was to receive the £100 million that the Government owe

it. Will that supplementary report be put before us in June or July of this year? For budget-making purposes in the place the other side of the river that is an imporant consideration.

Dr. Hampson: Will the hon. Gentleman put it on the record that the only reason that the GLC is the beneficiary to the tune of £100 million is that it has managed to spend £177 million—an amazing amount—less than it said that it would? It is only because of that that the Government are retrospectively obliged to pay that £100 million. Will the hon. Gentleman accept that?

Mr. Banks: No, I will not. The hon. Member, in view of his background, should not believe the propaganda that is now being put out by the Department of the Environment.

Dr. Hampson: What is the truth?

Mr. Banks: Very few hon. Members of this House have ever understood local authority finance. There might have been three. Two of them are now dead, I think, and one of them is speaking.
This loose expression of the variance of £177 million, which the hon. Member for Leeds, North-West mentioned, is taken in conjunction with the words "spend" and "expenditure" and there is a failure to highlight the fact that, first of all, block grant is calculated on the basis of the statutory definition of total expenditure, which is, inter alia, the sum of gross revenue expenditure on services, less income from grants and charges, plus the cost of financing capital expenditure adjusted for the effects of any surplus or deficit on

trading operations, interest and balances.
Secondly—and I would ask the hon. Gentleman to think about this—if the variance of £177 million is properly displayed in the context of the true influence of total expenditure, the GLC spending per se was within some 2 per cent., or £28 million, of its budgeted figure for gross expenditure on spending programmes. I should be delighted if the hon. Member for Leeds, North-West would comment on that at some other time.
Why are we waiting for the 1982–83 supplementary report? Most regrettably, I missed what the Under-Secretary said in his opening remarks. I have heard him speak on many occasions in the House, so I can probably guess from experience what was said. I do not suppose it will have spread a great deal of illumination with regard to local authority financing.
The DOE's alleged reason for not publishing the 1982–83 report earlier is that it is awaiting the audited outturn expenditure returns from local authorities. But as I understand it—and again I should be grateful if the Under-Secretary would tell me whether I have got it wrong—by 22 February of this year the DOE had received 408 outturn expenditure forms, which represented about 99 per cent. of total expenditure. Of these, 249 have been audited, which covers about 47 per cent. of total expenditure.
I do not know why over half of all local authorities have not submitted audited figures almost a year after the end of 1982–83, but I do know that the Greater London council submitted its figures in the autumn. It surely must be wrong for Londoners now to suffer delay and cost because of the dilatoriness of others. I should like to know, when


the Under-Secretary is winding up the debate, when we can expect the second supplementary report for 1982–83, because it is very important for the GLC.
I should like to go into much greater detail on the various propaganda sheets that have been put out by the Department of the Environment recently. I can only assume—and I apologise if, so young in this Parliament, I sound over-cynical—that the reason we are not dealing with the 1982–83 supplementary report is that the Minister wants to cause as much doubt, problem and confusion as he possibly can within the budgeting processes of county hall. This fits very well into the general approach that the Government are taking towards the GLC. It is an example of the sheer political vindictiveness that they adopt regarding the affairs of the GLC. They have made a number of totally misleading statements about the budget processes within county hall. I ask the Under-Secretary to give us this evening a categorical assurance that we shall see the 1982–83 supplementary report in June and July of this year.

Mr. Terry Fields: It is said that it is an ill wind that blows no one any good, and my hon. Friend the Member for Bootle (Mr. Roberts) spoke of the possible effect of the overall saving of £44 million for some local authorities. Labour Members who represent Liverpool constituencies think that it may provide a small windfall for Liverpool. There is all-party acknowledgement of the size of the problem facing the city, its people and the city council.
The Minister has expressed sympathy for Liverpool, but the people want something more tangible than sympathy, from whichever quarter it is expressed. It is an insult to the intelligence of the people to suggest that it is the so-called evil Marxists who are responsible for the city's demise. The Labour party has been in control of the Liverpool council only since May 1983. That is when it inherited the terrible legacy that is causing the present difficulties. It is the Tory Government and their pale-blue shadow in Liverpool, the Liberal party, who are responsible for the city's enormous problems.
We are all aware of the Goebbels-type propaganda from the Government and the Liberals. We are familiar with the attempts to rewrite history. We know the truth, which is being hidden from the people.

Mr. Simon Hughes: Will the hon. Gentleman give way.

Mr. Fields: No.
Environmental problems abound in Liverpool. There are bad housing conditions and no council houses have been built for four years. That is the Liberal party's housing record. There are 220,000 people on the housing waiting list and 1,000 are recognised as requiring special medical priority. These are matters of great concern to us in Liverpool.
We are looking to the Government to assist us in overcoming our problems. I find myself with strange bedfellows, including the Prime Minister, who in 1974 was a Front-Bench member of the Conservative Opposition. In a debate on a rate support grant order she said:
I agree with the right hon. Gentleman that the debate on the Rate Support Grant Order tends to be a technical debate—

although, because of his action, this will probably be the liveliest debate we have had for many years—but our constituents do not come to us with technical points.
That is especially true of the elderly. The right hon. Lady continued:
It is no good trying to explain to them an increase in rates by reference to the resources element, the domestic element, the needs element, the relevant expenditure and so on. They say 'I still have to bear a certain percentage of the increase in rates, and what are you going to do about that?' That is what many constituents and many hon. Members will be saying to the right hon. Gentleman today."—[Official Report, 25 March, 1974; Vol. 871, c. 62.]
Statistics can be thrown at me, but I am talking about the terrible conditions in which many of my constituents and many others live in Liverpool. If the Government are genuine in wanting to help resolve Liverpool's problems, they will find that they are able to be flexible and generous against the background of decades of deprivation and industrialisation. We have suffered and we continue to suffer. If the Government are genuine and are not merely making hypocritical announcements, they can do something tangible this week or this day.
Ways and means can be found to assist the people of Liverpool. On its revised figure, the Department has savings amounting to £44 million. That is the opportunity that is presented to the Government. The Chancellor of the Exchequer was able, at a stroke, to raise tax thresholds for high income earners. In so doing he gave away £35 million to 650,000 people. Liverpool has half a million people and we are asking for only £30 million of the £44 million to help us overcome our terrible problems.
In the debate on the Scottish rate support grant order, the right hon. Member for Western Isles (Mr. Stewart) said that his constituents would need £2 million to resolve their problems. The population of the Western Isles is 3,884 and Liverpool's population is 503,770. That means that if the city is treated on a par with the Western Isles it will require £31,600,000. The £30 million for which we are asking is a modest sum despite the criticism that has been expressed.

Mr. John Heddle (Mid-Staffordshire): Will the hon. Gentleman allow me to intervene?

Mr. Fields: No. Statements have been made in the House over the past week or more about the people's right to work.

Mr. Heddle: I should like to intervene on that very point.

Mr. Fields: Liverpool people want to work, but business interests deny them the right to do so. However, Liverpool city council has courageously provided jobs for as many as it can. The panacea to Liverpool's problems and crisis extolled by the Minister will not receive the universal support that he might suggest or believe. Tory politicians locally, at least tenuously in touch with the real world of Liverpool, have said that the Minister's solution is an irrelevance to the needs of Liverpool, and has no bearing on its problems.
For the first time, the debate on Liverpool, in the television programme "World in Action" last night, has raised—

Dr. Hampson: On a point of order, Mr. Speaker. I hesitate to say this, but the hon. Gentleman is debating Liverpool broadly, and now he has moved on to Liverpool as covered on television, but—

Mr. Speaker: I am not certain that that is a point of order. The hon. Member is disagreeing with something that has been said, but I do not think that it is a point of order.

Dr. Hampson: Further to that point of order, Mr. Speaker. My point is that the report affects Liverpool to the tune of £400,000, not £30 million.

Mr. Speaker: That is still a point of argument, I think.

Mr. Fields: The point I am trying to make concerns Liverpool and its crisis. The programme last night raised the issue from the crude gutter politics point of view of seeking to crucify individuals and personalise attacks on Liverpool city councillors. The disgraceful diatribe this afternoon from the Leader of the House was an absolute insult to decent people. [Interruption.] For the first time, on television last night, the truth and the reality of the situation was exposed for people to judge. Independent economists—

Mr. Richard Hickmet: rose—

Mr. Fields: No, I shall not give way.
Independent economists and academics have partially analysed the problem, and the Government's proposed solution and figures. In their view, the Minister could not even scratch the surface with his policies. For this reason, too, the courageous stand taken by Liverpool city councillors, the work force, the district Labour party and the people of Liverpool is being vindicated, and will be vindicated in future.
Liverpool's problems will not go away, and will only increase—

Dr. Hampson: rose—

Mr. Speaker: Order. I hope that the hon. Member will raise a point of order that I can answer, but I suspect that it will be a point of argument.

Dr. Hampson: On a point of order, Mr. Speaker. It is strictly a point of order. This is a debate concerning a supplementary report, limited to a small amount of money. The hon. Gentleman is speaking to a general debate about the problems of Liverpool. There are other times and places for the hon. Gentleman to speak on such matters.

Mr. Speaker: The hon. Member is entitled to say that he thinks that Liverpool should have a greater share of the grant.

Mr. Fields: Thank you, Mr. Speaker, for protecting me from Conservative Members.
In my maiden speech on 24 June last year, I warned that the Government's policies would provoke a reaction among decent working people. I give further warning tonight that, in Liverpool and elsewhere, this latest attack on democracy and the living standards of the working people will provoke even further social turmoil, because of the anger about the flagrant disregard for people generated by the Government's policies.
The guilty men reside not at the municipal buildings in Liverpool. They reside at No. 10 Downing street, No. 11 Downing street, the Department of the Environment—in every place that the Tory party occupies, pursuing policies disastrous for working people.
Having been exposed to the nation on television, will the Minister and his cohorts on the Front Bench come

clean and admit that they are wrong? Will they also, in an act of magnanimity, extend to the people of Liverpool a lifeline and draw back from the brink of confrontation over rates? Will they give us part of the £44 million saved to give the deprived people of Liverpool a little bit of dignity, because up to now they have done nothing in that direction?

Mr. Peter Pike: It is a privilege to follow an hon. Member representing Liverpool, because I do not underestimate the problems faced by my hon. Friend the Member for Liverpool, Broadgreen (Mr. Fields). I certainly do not envy Liverpool city council in dealing with the problems that it inherited from those previously in control, resulting from the policies of the Government.
My hon. Friend the Member for Blackburn (Mr. Straw) has referred to the designation of councils as inner urban area authorities, and the fact that partnership authorities receive more favourable financial treatment than other authorities that have only designated status. It should be recognised that councils designated under inner urban area schemes all represent deprived areas. Councils should all be treated equally favourably, whatever status they may have under inner urban area programmes.
I recently received a written answer from the Under-Secretary. I had asked the Secretary of State for the Environment:
if he will estimate the cost to local government for 1983–84 of additional duties placed on local government by Government legislation since 1979 excluding unified housing benefits.
The answer was remarkable. It was that:
The likely expenditure effects of new proposals affecting local government are not available centrally and would be too costly to obtain."—[Official Report, 1 February 1984; Vol. 53, c. 221.]
It is gross negligence on the part of the Government if they pass legislation and have no idea what the revenue implications are to be for local councils. Either the Government are dodging answering the question or they are incompetent to pass legislation with financial implications for local government.
I turn to the grant-related expenditure assessment scheme. One accepts that some scheme or formula for grants is necessary, but it should be fair and understandable. The present scheme is neither. I can give two examples. First, allocation of transport grant does not take into account whether a local authority runs its own transport undertakings or depends on the services of the National Bus Company or any other body. Secondly, the allocation for museums and art galleries is based on a factor that has nothing to do with museums and art galleries at all. An authority is awarded grant on the same basis whether or not it is responsible for any museums or art galleries. I could give further examples of similar nonsense, if time permitted. The scheme is unfair and incomprehensible.

Mr. Straw: This has been a more spirited debate than we had expected when the debate on the Public Accounts Committee collapsed early. There have been incisive contributions from my hon. Friends the Members for Bootle (Mr. Roberts) for Newham, North-West (Mr. Banks), for Liverpool, Broadgreen (Mr. Fields) and for Burnley (Mr. Pike).
I asked the Under-Secretary of State a series of questions about why the report does not make changes to


grant-related expenditure assessments, particularly those related to capital allocations, and why it does not grant additional disregards against target, particularly to take account of the increased level of police pay. My hon. Friend the Member for Burnley asked why it did not deal with other disregards, particularly those related to the urban programme.
My hon. Friend the Member for Liverpool, Broadgreen asked what would happen to the £44 million that is to be retrieved from the local authorities. Is it simply to return to the Treasury, or will local authorities benefit from it in some other way? My hon. Friend the Member for Newham, North-West asked why the Government have done the conjuring trick of producing the second supplementary report for 1983–84 before the second supplementary report for 1982–83. I hope that the Under-Secretary can answer that question more convincingly than he did at 9.15 this evening.
Other than that, the Government act most disgracefully whenever the GLC is mentioned. All of their actions towards the GLC are inspired by political malice of the worst kind.

Mr. Waldegrave: I never cease to be amazed by the House's capacity to make what look like devious and boring subjects into interesting and major debates. We can congratulate ourselves on that.
Perhaps I can deal first with the couple of points that have been relevant to the report. The first point, which was made by the hon. Member for Blackburn (Mr. Straw) and taken up by my hon. Friend the Member for Lewisham, West (Mr. Maples), was why we have not adjusted the GREs to reflect the position in individual authorities with regard to their interest payments. It would have been possible to reduce the amount of block grant payable to each local authority by adjusting GREs to reflect the effect of lower interest rates on each component but that would have been a relatively lengthy and complicated process. Instead, as my hon. Friend the Member for Lewisham, West correctly said, we have done it in a fairly broad-brush way by adjusting the grant-related poundage for spending in GRE. I think that I can console the hon. Member for Blackburn and my hon. Friend on this point because GREs will be adjusted later in a supplementary report in respect of 1983–84. Therefore, if there are any injustices for authorities, it will come right in the end. There has been no pressure from local authority associations to do it differently.
The hon. Member for Blackburn asked about disregards. We shall take into consideration the disregards that have been urged on us. I might be able to encourage the hon. Gentleman about the police. On the police pay award of September 1983, the Government have given assurances that the cost of the excess of the settlement—8·4 per cent. compared with the assumption in the 1983–84 settlement of 6 per cent.—will be disregarded and this will be implemented in the supplementary report which closes the books on that year. I hope that that meets the hon. Gentleman's point.
The hon. Member for Newham, North-West (Mr. Banks) was kind enough to say that he was not here when I made my first speech. I can only repeat the real arguments that I used then. As other local authorities have to contribute to the payments of the GLC in respect of its slightly fortuitous underspend for that year, it is fair to give

them a chance to rate for it in 1984–85. My hon. Friend the Member for Leeds, North-West (Dr. Hampson) made that point clearly. As the hon. Member for Newham, North-West said, it is true that only 53 per cent. of the audited figures are in. He might wish that it were otherwise, but that is the case.

Mr. Tony Banks: What does that represent in terms of total expenditure? That was my point.

Mr. Waldegrave: I do not have that figure with me, but I shall write to the hon. Gentleman. It would be most odd to give some audited and some unaudited figures. The hon. Gentleman need not fear a conspiracy. There has never been any question about London ratepayers' money going back to the GLC. I am sure that the House would have more pleasure in returning it if there were some hope of some of it going back to the ratepayers. However, I can give the hon. Gentleman the assurance for which he asked—the second supplementary report for that year will be laid in June or July this year. There is no secret about that.
The point of the hon. Member for Southwark and Bermondsey (Mr. Hughes), is a regular Liberal refrain—why can the world not be different and simpler? Why can everything not be easy? My hon. Friend the Member for Leeds, North-West made an exceedingly clear statement. The hon. Member for Southwark and Bermondsey may be arguing that we can do without an equalisation element in the rate support grant system. I am sure that he is not, although the hon. Member for Bootle (Mr. Roberts) appeared to think that no equalisation was left in the system. Of course there is. Under any equalisation system, there are bound to be complex flows from one authority to another and complicated mechanisms for equalising resources. That is inherent in any system, for example, a local tax system. The hon. Member for Southwark and Bermondsey was fair in saying that the Government are looking for ways to simplify the system. I outlined how we propose to go to a more predictable series of three-year reports, and I believe that the local authorities welcome that measure.
I have another point of encouragement for the hon. Member for Southwark and Bermondsey. With the local authority associations, we are looking at the future treatment of the variable items. Perhaps the system can be altered to give authorities more certainty—for example, about interest rates—at the time of the settlement. En so far as local authorities have had to pay out less, they have not suffered. This measure merely prevents them from getting a windfall gain.
It is a long time since I have had the pleasure of the support of my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) on a local government matter, but his contribution was no less useful and pleasurable for that. He pointed out that we have been making rather heavy weather about a simple report. The order makes an adjustment which would have been made the other way if interest rates had been higher than expected. A great deal of the sound and fury we have heard has been based on a misunderstanding or on a desire to make moving speeches—a desire always apparent among Opposition Members.
I do not take the hon. Member for Liverpool, Broadgreen (Mr. Fields) to task for using this opportunity to make another speech about Liverpool's problems, which I am sure exercise the attention of all hon.


Members. The report has an extremely minor effect on Liverpool, as it does on other authorities. I do not believe that the hon. Gentleman would expect me to respond to his points, except in the most general terms.

Mr. Eddie Loyden: Will the Under-Secretary of State respond to the question about the responsibility of the Government, who have created unemployment in areas such as Merseyside? The Government's complete disregard of those problems has something to do with the needs in that area. The Government should start to respond to those needs.

Mr. Waldegrave: The hon. Gentleman probably knows better than I do that, since 1979, the Government have invested almost £1,000 million in Liverpool in capital flows of one kind or another. Ministers in my Department often come under pressure from other parts of the country for saying that there have been great flows of money towards Liverpool.

Mr. Robert N. Wareing: Will the hon. Gentleman give way?

Mr. Waldegrave: I am coming to the end of my speech. I did the hon. Member for Broadgreen the courtesy of referring to his speech, but this is not a Liverpool debate. We understand the passion and anxiety that all Members representing Liverpool constituencies and other hon. Members must feel. That is why the Government have directed huge flows of money to Merseyside during the past year. I do not believe that anyone can say that the Government have not been aware of the region's problems. In the months ahead, there will be plenty of other opportunities to debate Liverpool's problems. All hon. Members support the Labour Front Bench in urging the Labour group in Liverpool to draw back from the brink of what might be a disastrous and irresponsible course of action. I know that many Conservative Members want to pay tribute to the stand taken by the Leader of the Opposition on this matter. I am not so sure that he is receiving all the support he wants from Labour Back Benchers.
The principle in my first speech involved the evidence of the rating increases across the country. I pay tribute to the local authorities that have achieved the Government's aim. The expenditure increase as a whole, which looks like coming about between 1983–84 and 1984–85, show that the pressures brought to bear to restrain the growth of local authority expenditure are beginning to pay off. That expenditure is now much slower than it was. The rate increases are likely to be at their lowest since the reorganisation of local government brought about by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). The level of rate increases in the next year will be within touching distance of the inflation rate. That has not happened during the past 10 years. We can congratulate ourselves on that aspect.
The order is only a small part of the system which is beginning to bring about that satisfactory state of affairs. The debate has been wide-ranging and has touched on many different aspects of the local authority financial system. I hope that I have responded to those points that bore some relation to that order. They were not—

It being half-past Eleven o'clock, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

The House divided: Ayes 244, Noes 171.

Division No. 196]
[11.30 pm


AYES


Adley, Robert
Finsberg, Sir Geoffrey


Aitken, Jonathan
Fookes, Miss Janet


Amess, David
Forman, Nigel


Ancram, Michael
Forsyth, Michael (Stirling)


Arnold, Tom
Fox, Marcus


Ashby, David
Franks, Cecil


Aspinwall, Jack
Fraser, Peter (Angus East)


Atkins, Rt Hon Sir H.
Freeman, Roger


Atkins, Robert (South Ribble)
Fry, Peter


Baker, Rt Hon K. (Mole Vall'y)
Gale, Roger


Baker, Nicholas (N Dorset)
Galley, Roy


Baldry, Anthony
Gardiner, George (Reigate)


Banks, Robert (Harrogate)
Gardner, Sir Edward (Fylde)


Batiste, Spencer
Garel-Jones, Tristan


Beaumont-Dark, Anthony
Glyn, Dr Alan


Bellingham, Henry
Goodhart, Sir Philip


Bendall, Vivian
Goodlad, Alastair


Benyon, William
Gow, Ian


Berry, Sir Anthony
Gower, Sir Raymond


Best, Keith
Grant, Sir Anthony


Bevan, David Gilroy
Greenway, Harry


Biffen, Rt Hon John
Gregory, Conal


Biggs-Davison, Sir John
Griffiths, Peter (Portsm'th N)


Blaker, Rt Hon Sir Peter
Grist, Ian


Bonsor, Sir Nicholas
Ground, Patrick


Boscawen, Hon Robert
Grylls, Michael


Bottomley, Peter
Hamilton, Neil (Tatton)


Bowden, A. (Brighton K'to'n)
Hampson, Dr Keith


Bowden, Gerald (Dulwich)
Hanley, Jeremy


Boyson, Dr Rhodes
Hannam, John


Brandon-Bravo, Martin
Hargreaves, Kenneth


Bright, Graham
Harris, David


Brinton, Tim
Haselhurst, Alan


Brooke, Hon Peter
Havers, Rt Hon Sir Michael


Brown, M. (Brigg &amp; Cl'thpes)
Hawkins, C. (High Peak)


Browne, John
Hawksley, Warren


Bryan, Sir Paul
Hayes, J.


Buck, Sir Antony
Hayhoe, Barney


Budgen, Nick
Hayward, Robert


Bulmer, Esmond
Heddle, John


Burt, Alistair
Henderson, Barry


Butler, Hon Adam
Heseltine, Rt Hon Michael


Butterfill, John
Hickmet, Richard


Carlisle, John (N Luton)
Hicks, Robert


Carlisle, Kenneth (Lincoln)
Higgins, Rt Hon Terence L.


Carttiss, Michael
Hind, Kenneth


Chapman, Sydney
Hirst, Michael


Chope, Christopher
Hogg, Hon Douglas (Gr'th'm)


Churchill, W. S.
Holland, Sir Philip (Gedling)


Clark, Dr Michael (Rochford)
Holt, Richard


Clark, Sir W. (Croydon S)
Hooson, Tom


Clarke, Rt Hon K. (Rushcliffe)
Hordern, Peter


Colvin, Michael
Howarth, Alan (Stratf'd-on-A)


Conway, Derek
Howarth, Gerald (Cannock)


Coombs, Simon
Howell, Rt Hon D. (G'ldford)


Cope, John
Hubbard-Miles, Peter


Corrie, John
Hunt, David (Wirral)


Couchman, James
Hunt, John (Ravensbourne)


Dicks, Terry
Hunter, Andrew


Dorrell, Stephen
Hurd, Rt Hon Douglas


Douglas-Hamilton, Lord J.
Jackson, Robert


Dover, Den
Jenkin, Rt Hon Patrick


Durant, Tony
Johnson-Smith, Sir Geoffrey


Dykes, Hugh
Jones, Gwilym (Cardiff N)


Edwards, Rt Hon N. (P'broke)
Jones, Robert (W Herts)


Eggar, Tim
Kershaw, Sir Anthony


Emery, Sir Peter
Key, Robert


Evennett, David
King, Roger (B'ham N'field)


Eyre, Sir Reginald
King, Rt Hon Tom


Fairbairn, Nicholas
Knight, Gregory (Derby N)


Favell, Anthony
Knight, Mrs Jill (Edgbaston)


Fenner, Mrs Peggy
Knowles, Michael






Knox, David
Ottaway, Richard


Lamont, Norman
Page, John (Harrow W)


Lang, Ian
Page, Richard (Herts SW)


Latham, Michael
Parris, Matthew


Lawrence, Ivan
Patten, John (Oxford)


Leigh, Edward (Gainsbor'gh)
Pawsey, James


Lennox-Boyd, Hon Mark
Peacock, Mrs Elizabeth


Lester, Jim
Pink, R. Bonner


Lewis, Sir Kenneth (Stamf'd)
Pollock, Alexander


Lightbown, David
Porter, Barry


Lilley, Peter
Powell, William (Corby)


Lloyd, Peter, (Fareham)
Powley, John


Lord, Michael
Prentice, Rt Hon Reg


Lyell, Nicholas
Proctor, K. Harvey


McCrindle, Robert
Raffan, Keith


McCurley, Mrs Anna
Raison, Rt Hon Timothy


Macfarlane, Neil
Rathbone, Tim


MacGregor, John
Renton, Tim


MacKay, Andrew (Berkshire)
Rhodes James, Robert


MacKay, John (Argyll &amp; Bute)
Rhys Williams, Sir Brandon


Maclean, David John.
Ridley, Rt Hon Nicholas


McNair-Wilson, P. (New F'st)
Ridsdale, Sir Julian


Madel, David
Rifkind, Malcolm


Major, John
Rumbold, Mrs Angela


Malins, Humfrey
Sainsbury, Hon Timothy


Malone, Gerald
St. John-Stevas, Rt Hon N.


Maples, John
Shaw, Giles (Pudsey)


Marland, Paul
Shepherd, Colin (Hereford)


Marshall, Michael (Arundel)
Shersby, Michael


Mates, Michael
Skeet, T. H. H.


Mather, Carol
Spicer, Michael (S Worcs)


Mawhinney, Dr Brian
Stevens, Lewis (Nuneaton)


Mayhew, Sir Patrick
Stewart, Allan (Eastwood)


Mellor, David
Stewart, Andrew (Sherwood)


Meyer, Sir Anthony
Stokes, John


Miller, Hal (B'grove)
Tapsell, Peter


Mills, lain (Meriden)
Thompson, Donald (Calder V)


Miscampbell, Norman
Thorne, Neil (llford S)


Mitchell, David (NW Hants)
Thurnham, Peter


Moate, Roger
van Straubenzee, Sir W.


Monro, Sir Hector
Viggers, Peter


Moore, John
Wakeham, Rt Hon John


Morrison, Hon C. (Devizes)
Waldegrave, Hon William


Moynihan, Hon C.
Walker, Bill (T'side N)


Mudd, David
Wall, Sir Patrick


Neale, Gerrard
Waller, Gary


Needham, Richard
Ward, John


Nelson, Anthony
Warren, Kenneth


Newton, Tony



Nicholls, Patrick
Tellers for the Ayes:


Norris, Steven
Mr. Archie Hamilton and Mr. Michael Neubert.


Onslow, Cranley





NOES


Adams, Allen (Paisley N)
Clark, Dr David (S Shields)


Alton, David
Clay, Robert


Anderson, Donald
Cocks, Rt Hon M. (Bristol S.)


Archer, Rt Hon Peter
Cohen, Harry


Ashley, Rt Hon Jack
Coleman, Donald


Ashton, Joe
Concannon, Rt Hon J. D.


Atkinson, N. (Tottenham)
Cook, Robin F. (Livingston)


Banks, Tony (Newham NW)
Corbett, Robin


Barron, Kevin
Corbyn, Jeremy


Beckett, Mrs Margaret
Craigen, J. M.


Bell, Stuart
Crowther, Stan


Benn, Tony
Cunliffe, Lawrence


Bennett, A. (Dent'n &amp; Red'sh)
Cunningham, Dr John


Bermingham, Gerald
Dalyell, Tam


Blair, Anthony
Davies, Rt Hon Denzil (L'lli)


Boothroyd, Miss Betty
Davies, Ronald (Caerphilly)


Bray, Dr Jeremy
Davis, Terry (B'ham, H'ge H'l)


Brown, Gordon (D'f'mline E)
Deakins, Eric


Brown, Hugh D. (Provan)
Dewar, Donald


Brown, N. (N'c'tle-u-Tyne E)
Dobson, Frank


Brown, R. (N'c'tle-u-Tyne N)
Dormand, Jack


Callaghan, Jim (Heyw'd &amp; M)
Douglas, Dick


Campbell, Ian
Dubs, Alfred


Campbell-Savours, Dale
Duffy, A. E. P.


Canavan, Dennis
Dunwoody, Hon Mrs G.


Carter-Jones, Lewis
Eadie, Alex





Eastham, Ken
Maynard, Miss Joan


Ellis, Raymond
Meacher, Michael


Evans, John (St. Helens N)
Meadowcroft, Michael


Fatchett, Derek
Michie, William


Field, Frank (Birkenhead)
Mikardo, Ian


Fields, T. (L'pool Broad Gn)
Miller, Dr M. S. (E Kilbride)


Fisher, Mark
Mitchell, Austin (G't Grimsby)


Flannery, Martin
Morris, Rt Hon A. (W'shawe)


Foot, Rt Hon Michael
Morris, Rt Hon J. (Aberavon)


Forrester, John
Nellist, David


Foster, Derek
Oakes, Rt Hon Gordon


Foulkes, George
O'Brien, William


Fraser, J. (Norwood)
O'Neill, Martin


Freeson, Rt Hon Reginald
Orme, Rt Hon Stanley


George, Bruce
Owen, Rt Hon Dr David


Gilbert, Rt Hon Dr John
Park, George


Godman, Dr Norman
Parry, Robert


Gould, Bryan
Patchett, Terry


Hamilton, James (M'well N)
Pendry, Tom


Hamilton, W. W. (Central Fife)
Penhaligon, David


Hardy, Peter
Pike, Peter


Harman, Ms Harriet
Powell, Raymond (Ogmore)


Harrison, Rt Hon Walter
Prescott, John


Healey, Rt Hon Denis
Randall, Stuart


Heffer, Eric S.
Rees, Rt Hon M. (Leeds S)


Hogg, N. (C'nauld &amp; Kilsyth)
Robinson, G. (Coventry NW)


Holland, Stuart (Vauxhall)
Rogers, Allan


Home Robertson, John
Rooker, J. W.


Howell, Rt Hon D. (S'heath)
Ross, Ernest (Dundee W)


Howells, Geraint
Rowlands, Ted


Hoyle, Douglas
Sedgemore, Brian


Hughes, Dr. Mark (Durham)
Sheerman, Barry


Hughes, Robert (Aberdeen N)
Sheldon, Rt Hon R.


Hughes, Roy (Newport East)
Shore, Rt Hon Peter


Hughes, Sean (Knowsley S)
Short, Mrs H.(W'hampt'n NE)


Hughes, Simon (Southwark)
Silkin, Rt Hon J.


Janner, Hon Greville
Skinner, Dennis


John, Brynmor
Smith, C. (Isl'ton S &amp; F'bury)


Jones, Barry (Alyn &amp; Deeside)
Smith, Rt Hon J. (M'kl'ds E)


Kaufman, Rt Hon Gerald
Soley, Clive


Kilroy-Silk, Robert
Spearing, Nigel


Kirkwood, Archibald
Stott, Roger


Lamond, James
Strang, Gavin


Leighton, Ronald
Straw, Jack


Lewis, Ron (Carlisle)
Thomas, Dr R. (Carmarthen)


Lewis, Terence (Worsley)
Thompson, J. (Wansbeck)


Litherland, Robert
Thorne, Stan (Preston)


Lloyd, Tony (Stretford)
Tinn, James


Lofthouse, Geoffrey
Torney, Tom


Loyden, Edward
Wallace, James


Macfarlane, Neil
Warden, Gareth (Gower)


McKay, Allen (Penistone)
Wareing, Robert


Mackenzie, Rt Hon Gregor
Welsh, Michael


McNamara, Kevin
White, James


McWilliam, John
Williams, Rt Hon A.


Madden, Max
Winnick, David


Marek, Dr John
Young, David (Bolton SE)


Marshall, David (Shettleston)



Martin, Michael
Tellers for the Noes:


Mason, Rt Hon Roy
Mr. Frank Haynes and Mr. Don Dixon.


Maxton, John



Maxwell-Hyslop, Robin

Question accordingly agreed to.

Resolved,
That the Rate Support Grant Supplementary Report (England) (No. 2) 1983–84, which was laid before this House on 12th March, be approved.

BUSINESS OF THE HOUSE

Ordered,
That, at tomorrow's sitting, the Motion relating to House of Commons (Services) may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later, and Mr. Speaker shall then put any Question necessary to dispose of proceedings thereon, if not previously concluded.—[Mr. David Hunt.]

PROCEDURE

Ordered,
That Mr. Allen Adams, Mr. A. J. Beith, Mr. Jim Callaghan, Mr. Christopher Chope, Sir Walter Clegg, Viscount Cranborne, Sir Peter Emery, Mr. Greville Janner, Mr. Hugh McCartney, Mr. John McWilliam, Mr. Robin Maxwell-Hyslop, Sir Hector Monro, Mr. Charles Morrison, Mr. J. Enoch Powell, Mr. Fred Silvester and Mr. Roger Sims be members of the Select Committee on Procedure.

Ordered,
That the members of the Committee nominated this day shall continue to be members of the Committee for the remainder of this Parliament.

Ordered,
That this Order be a Standing Order of the House.—[Mr. David Hunt.]

Heriot-Watt University (Pharmacy Department)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]

Lord James Douglas-Hamilton: I wish tonight to raise the issue of the future of the oldest pharmacy department in the United Kingdom, founded in 1776. Edinburgh has had an unbroken tradition of teaching pharmacy for more than 200 years. The school of pharmacy owed its origins to the royal public dispensary, the first to be founded in Britain. Not only is the tradition of a learned profession to be much respected, but Edinburgh, and particularly this department, has become a centre of medical excellence and research.
Edinburgh is rightly known as the Athens of the north, being the capital of Scotland. It is one of the greatest centres of medical learning in the Western world.

Mr. John Maxton: What about Glasgow?

Lord James Douglas-Hamilton: Glasgow is a distinguished city and the university there has a pharmaceutical department. The two cities are not in competition over this. Edinburgh is also the home of the Pharmaceutical Society of Great Britain, the medicines testing laboratory, the pharmaceutical division of the Scottish Home and Health Department and the Pharmaceutical General Council of Scotland. As the Edinburgh Royal infirmary confirms, Edinburgh is such a centre of pharmacy that the lack of a school of pharmacy would be a serious matter. It is necessary to have such a department in a city with the medical standing of Edinburgh.
The allegation has been made that the research at this Department is modest, but there are already signs of growth. Much collaborative work has been undertaken and that is increasing. There are at least 12, if not more, projects with hospitals, industry and university departments. One of the ways in which a small department can build up its strength is by having links with other universities and institutions.
At the site at Riccarton there would be scope for development and such research would increase. Lothian health board has stated that the department of pharmacy is now realising its research potential in what are considered exciting and profitable areas. I am glad to say that this view is supported by the chairman of the Scottish Development Agency, who has written that the department has a substantial role in underpinning the pharmaceutical industry. After all, if there is to be considerable growth in biotechnology this is a development in which pharmacists would be ideally employed.
The matter goes deeper and involves the whole issue of health care. The closure of this department would have an adverse effect on health care since research facilities would no longer be available in the south-east of Scotland. Additional expertise would be lost to a centre of medical excellence. The expertise for continuing professional education would go, and the academic and professional back-up in both hospital pharmacy and community pharmacy would disappear. This would place pharmacy at a serious disadvantage in maintaining an effective health care service in south-east Scotland.
Of course, the standards of training in this department are excellent; 90·5 per cent. of the students get first or second class honours degrees and in the past five years virtually all the students who have qualified have obtained employment. The Minister has not yet published the figures from other departments throughout Britain, but none of them can possibly excel the record of Heriot-Watt and no doubt a great many of them will not come near to equalling it.
In any case, the demand in the east and central belt of Scotland is immense. In 1983, under pressure from the University Grants Committee, the university reduced its intake to 22 students out of 620 applicants. As Boots the chemists confirm, the quality of students produced has been second to none and they are invariably well motivated and trained to meet all their professional responsibilities. Of course, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) happens to be one of the graduates. The message from hospitals, medical schools, community pharmacists and industry has been that the pharmacy graduates are of the highest quality. This is proved by the fact that they all go on to jobs.
There is a Scottish dimension to this in that 54 per cent. of all graduates are employed in the south-east and central belt of Scotland and 72 per cent. in Scotland as a whole. If the school closes, the Scottish students will be at a disadvantage when applying for Chelsea and Nottingham, as the Scottish educational system does not have A-level certificates. This would seriously reduce the opportunity for Scottish students in south-east Scotland acquiring a university pharmacy education.
The manpower needs of health care industries in southeast Scotland are being actively promoted by the Scottish Development Agency and the role of the department in this part of Scotland complements the departments in Glasgow and Aberdeen. On 17 March 1982, in response to a debate in the House, my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) said:
The UGC has assured Heriot-Watt university that it will be given every encouragement to concentrate its activities at Riccarton and to move out of the city centre."—[Official Report, 17 March, 1982; Vol. 20, c. 404.]
It should also be mentioned that there would be a relative increase in the cost of the brewing and biological sciences building at Riccarton if pharmacy were not to move into the same building. Because the accommodation would be shared between two faculties instead of three, the relative cost would go up. Closing this department would turn out be a false economy. In any case, approximately 70 per cent of the students in the pharmacy department are women and the vast majority of the students in the other departments are men, so the inclusion of this department on the site at Riccarton would help to get an appropriate balance between men and women. Sometimes it is suggested that women do not work outside the home all their working lives.
It should not be forgotten that women who have had children or are pregnant often work as locums in pharmacies.
Today the hon. Member for Clackmannan (Mr. O'Neill) took a deputation—I was glad to go with him, along with the hon. Member for Falkirk, West (Mr. Canavan), the hon. Member for Greenock and Port Glasgow (Dr. Godman), who has taught at Heriot-Watt university, and the hon. Member for Roxburgh and

Berwickshire who, as I said, is a graduate—to see the chairman of the UGC. We hope that the Minister will pass on to the chairman the further details that will be mentioned in this debate.
In summary, the essence of the matter is that the UGC is in danger of striking at the heart of the Scottish education system. Since time immemorial, more Scots have gone to university than is the case with their contemporaries in England. They see education as being vitally important, because it touches on the aspirations that men and women have for their children. Napoleon used to say that every French soldier had a field marshal's baton in his rucksack. In much the same way, every Scots student knows that he has the opportunity to attain fulfilment, because he or she has access to the best education institutions in the land. The loss of a centre of excellence would be a thoroughly retrograde step. I believe that it would be worse than a mistake; it would be a blunder.

Mr. Martin J. O'Neill: It is relatively unusual to have a shared Adjournment debate, but it is part of the all-party nature of the campaign that has been waged in defence of the pharmacy department of Heriot-Watt. The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) said that today—almost uniquely in perhaps the most warring of all parts of the United Kingdom politically—an all-party deputation went to see the chairman of the UGC. We were unanimous in the view that we put to him, which was that the contribution made by the pharmacy department of Heriot-Watt was not to be seen in a regional sense, which was what the chairman endeavoured to convey to us, saying that his part of England did not have a pharmacy department.
We argue that the pharmacy department of Heriot-Watt not only makes a major contribution to National Health Service provision in east-central Scotland—or the Forth estuary, to put it in its widest geographical context—but is an integral part of the unique contribution that Edinburgh and the east of Scotland make to the whole medical profession and the academic standing of the United Kingdom medical profession throughout the world. Without the pharmacy department, that contribution would be greatly debased.
It is not the students' fault that the numbers are now such that the chairman of the UCC can say, according to the economics of scale, that the pharmacy department is beginning to become an uneconomic unit. In 1981, the UGC recommended that the student intake figures should fall from 60 to 48. Moreover, the pharmacy panel of the UGC—not the most unbiased of bodies, in that it represents a vested interest within the pharmacy business, for want of a better expression—came to the conclusion that perhaps the research side was deficient, as compared with the research dimension of other pharmacy departments.
We would argue that the position of Heriot-Watt has been improving considerably over the past five to six years, that its transition to an institution of higher learning and a university has meant that the emphasis on teaching has taken precedence and that the quality of the teaching is evidenced by the degree performance, which bears comparison with that of any other institution in the United Kingdom. There are dual responsibilities in a department such as pharmacy concerning research and vocational


training. On the vocational training side Heriot-Watt has acquitted itself in such a way that it has been defended across the whole spectrum of the pharmaceutical world, including business, the Health Service and academic institutions; all have been forthcoming and willing to provide the maximum degree of support for the sustaining of this institution.
I do not take the opportunity this evening to knock the Government because at the moment the Government have still to say what they have to say. We have not chased them. It is the University Grants Committee and, in many respects, the internal workings of the UGC that has produced this report. We think that it is wrong. We think that the support of the Department of Education and Science should be placed behind this institution, based not simply on the needs of the Health Service or the pharmaceutical industry but, more than anything else, on the name of Scottish education and the Scottish contribution to medicine, which goes far beyond the confines of the House or the party debates in which we normally participate.
I ask the Minister to use what influence he has—and some of us have become somewhat cynical about the influence that the DES has had in recent years over the UGC, at least in respect of the UGC's willingness to participate in cutting the educational budget. Here is a chance for the Minister to prove that the DES, in the context of an arm's length relationship with higher education, with the UGC, can operate contructively and in defence of higher education and of what we think is one of the outstanding academic traditions in this country, the contribution that the Heriot-Watt pharmacy department has made to the medical service and to higher education and learning in our country.

Mr. Barry Henderson: I declare an interest as a member of the general convocation of the university of Heriot-Watt and as a Member of the House for a constituency in the Forth valley.
That is the first reason why I am very grateful to my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) for having initiated this debate. The interest throughout the area is evidenced by the substantial number of hon. Members in the Chamber at this time of night.
Of the graduates who leave the school of pharmacy at Heriot-Watt, virtually all find jobs, and more than half find jobs in central and southern Scotland, including the Fife region. It will, therefore, be clear that any diminution of the activity of that school will have serious consequences for the provision of pharmacy facilities in the region.
Edinburgh is a centre of excellence in the whole of medicine, whether in teaching, research, practice of medicine or, perhaps not least important, in the industrial activities involved in supplying goods and services to medicine. All these are found in the centre of excellence in Edinburgh and the loss of the pharmacy department of Heriot-Watt would be a loss to that total medical excellence.
The University Grants Committee has a difficult job to do. One sympathises with the problems of the chairman and his committee in having to make finely balanced

judgments which will always be very difficult to achieve. Given that situation, there will be times when, at the margin, that judgment must be called in question, and on this occasion I believe that my hon. Friend is right to stress the importance of this department. I believe that with the move to Riccarton there is real scope for the enhancement of its already high reputation, not least in its research facilities. I hope that the UGC, on further consideration, will reprieve this department.

Mr. Michael Forsyth: I very much appreciate the opportunity to support the initiative taken by my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton). Having followed the debate in the newspapers before our debate this evening, I have been struck by the extraordinary way in which the UGC operates its peer review system. It is extraordinary that the committee set up by the UGC should conclude that the three departments represented on the committee were the best in the field and that the department that was not represented was somewhat sub-standard.
I find the UGC's explanation that it always appoints the best people to its committees, and that they come from the best departments, unconvincing to say the least. It is clear that the decision has turned, if it has been made, on the basis of its subjective view of the department. However, graduates from that department are able to find jobs, and there is a shortage of people for the posts in hospitals, possibly because of the low salaries for those posts.
The UGC consistently fails to take into account the special nature of Scottish universities, and particularly of Scottish students, who with their examinations taken at highers, find it relatively more difficult to get into English universities. Therefore, to remove this institution would be far more catastrophic in its impact than a cut in a similar department in England. The insensitivity in the UGC is mirrored in the unrest among the vice-chancellors—unrest that was not there when we had the devolution debate.
Perhaps this decision shows that we should move towards a system in which we can get rid of the UGC in Scotland and have the universities supported more on the basis of student choice, which is what the general council of St. Andrews has suggested. If my hon. Friend wants to quell such radical thoughts in the breasts of people in Scotland, I hope that he can reassure us, because this is a matter of considerable concern. If it is decided to close this department, there will be great disappointment.

12 midnight

The Under-Secretary of State for Education and Science (Mr. Peter Brooke): I thank my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) for raising this matter tonight, and the hon. Member for Clackmannan (Mr. O'Neill) and my hon. Friends the Members for Fife, North-East (Mr. Henderson) and for Stirling (Mr. Forsyth) for joining in this debate. I am conscious of the deep concern of my hon. Friend the Member for Edinburgh, West for the future of the department of pharmacy at Heriot-Watt university, situated in his constituency. The debate, as he points out, is timely in that the University Grants Committee is due to make a final decision about its willingness to continue to fund the school at its meeting on Thursday. My hon. Friend has asked me a number of written questions, and


I am only sorry that in some instances the relevant information is outside the Government's control, and I have not yet been able to write to him.
I shall first say a little about the relationship between the Government and the University Grants Committee. Since the UGC was founded in 1919, it has been a fundamental principle that judgments relating to relative quality and the allocation of resources between individual institutions were matters for peer review by a body composed mainly of academics, rather than matters for decision by Ministers and civil servants. This principle has been upheld by successive Governments.
While pharmacy provision in the universities has only recently come to the fore following the UGC's recommendation to the principal of Heriot-Watt that pharmacy teaching at the university should be discon- tinued, the UGC has been monitoring the number of students studying pharmacy for some time. In 1977, following a report by the advisory panel on pharmacy established by the UGC, the then chairman, Sir Frederick
Dainton, wrote to all universities explaining that it was the panel's view that expansion in pharmacy was not required.
In December 1980 the Pharmaceutical Society of Great Britain published the report of its manpower committee, which concluded that
the need to reduce the entry to British schools of pharmacy is clearly indicated".
Based partly on the report's conclusion, the chairman of the UGC, in his letter of 1 July 1981 to all universities announcing grant for 1981–82 and giving guidance for succeeding years, said
The Committee proposes a reduction of about one-quarter in the number of places available for subjects allied to medicine, much of the reduction falling upon pharmacy".
In his specific advice to Heriot-Watt university the chairman recommended
a substantial reduction in Pharmacy numbers
and said that:
the Committee would wish to discuss with the university the possibility of discontinuing Pharmacy".
The UGC's general advice drew criticism from, among others, the university schools of pharmacy and the Pharmaceutical Society of Great Britain, the latter explaining that its survey had been based on figures for 1969 and contending that a reduction of only 10 per cent. was required in the overall entry to pharmacy courses. In September 1981, the UGC established a panel on studies allied to medicine to inquire into and advise the committee on the scale and nature of provision in universities required to meet national needs for education, training and employment in these subjects. Because of the controversy that had arisen over manpower requirements for pharmacy, the panel decided to deal first with the output of university pharmacy graduates in relation to national requirements, taking account also of the nature and academic standard of pharmaceutical education in the courses and the ability of individual schools of pharmacy to make adequate provision.
During the course of its inquiries, the panel held a meeting which was attended by representatives of the NAB pharmacy group, which was undertaking a similar inquiry into pharmacy provision in higher education institutions in the local authority sector, in England and Wales, with the Pharmaceutical Society of Great Britain and with the Department of Health and Social Security.
Among the issues discussed at that meeting were manpower demand, overall intake levels to schools of

pharmacy and the minimum viable size of a school of pharmacy. The meeting estimated that the pharmaceutical profession needed the equivalent of 650 to 700 new full-time pharmacists each year, which the Pharmaceutical Society of Great Britain considered was consistent with its target of 900 new registrations per annum for the United Kingdom. Given that approximately 82 per cent. of entrants to pharmacy courses achieved professional registration, the panel estimated that there would be a need for an annual home and European Community student intake to schools of pharmacy across all sectors of higher education of about 1,000 in the United Kingdom. In arriving at this figure the panel took into account that approximately. 100 overseas students had entered the university and public sector schools annually over the past four years.
As the Pharmaceutical Society of Great Britian supported the continuation of the broad historic balance of two-thirds of the pharmacy student population in the university sector and one-third in the public sector, the panel concluded that overall intakes to university schools of pharmacy should be reduced to 655–34 less than in 1982 and 137 less than in 1979. Together with the national advisory body pharmacy group recommendation for a reduced intake of 350 in 1984–85 and the increase in the entry to Robert Gordon's Institute of Technology course in 1983 to 54, the total intake of home and Community pharmacy students across all sectors of higher education will be 1,059 in 1984–85—an overall reduction of 12·4 per cent. from the 1979 intake.

Mr. Tam Dalyell: rose—

Mr. Brooke: I am very pressed for time.
In the light of the panel's assessment of the academic quality of the Heriot-Watt department of pharmacy, the level of intake to the department, and the fact that it would cost approximately £800,000 to transfer the department to the university's new site at Riccarton, the panel recommended that
the provision of pharmacy courses at Heriot-Watt University should be discontinued and that the students entering:n 1984–85 should be the final intake.
It is appreciated that the closure of the department of pharmacy at Heriot-Watt would result in reduction in pharmacy provision in Scotland. There are however, two other departments or schools of pharmacy in Scotland—

Mr. Robin Cook: rose—

Mr. Brooke: —at Strathclyde University, where it is recommended by the UGC panel that the intake should increase, and at Robert Gordon's Institute of Technology, Aberdeen, a central institution which, with the agreement of the Scottish Education Departments, the panel visited and which increased its intake for October 1983 to 60, including six overseas students. The increased intake for Strathclyde recommended by the UGC panel and the increased intake to Robert Gordon's institute will provide Scotland, which has approximately 9 per cent. of the population of Great Britain, with between 12 and 13 per cent. of both the total and university pharmacy places.
Of course, I also appreciate that, as my hon. Friend the Member for Edinburgh, West has pointed out, Scottish students possess Scottish higher qualifications, and not A-levels. I understand, however, that Scottish higher qualifications are accepted by all English universities as general entrance qualifications, although I faculties might have their own additional requirements.
The UGC recognised that its recommendation had significant implications both for the university and for the staff of the school, whose interests the committee appreciated would need to be considered. The committee therefore invited the principal to discuss the matter further, and a meeting with senior representatives of the university and its school of pharmacy took place last month. I understand that at that meeting the principal set out the university's case for the continuation of the school. More recently he submitted to the committee a dossier of information relating to the case for the retention of the department of pharmacy at Heriot-Watt entitled "The Future of Pharmacy", a copy of which he has also sent to me and to my right hon. Friend. The dossier has also been considered by the panel on studies allied to medicine and the UGC medical sub-committee. Representatives of the UGC also met last month representatives of the Pharmaceutical Society of Great Britain.
I can assure my hon. Friend that the UGC is fully aware of the arguments that have been put forward for the retention of the Heriot-Watt department of pharmacy, including the regard in which its graduates are held by the employers of pharmacists, the admirable record its graduates have in obtaining employment, its working relationship with local health services and its long tradition. These facts and others have been put to the committee by the university and the Pharmaceutical society and many other interested bodies. They will all be taken into account by the committee when it reaches its decision about the future of the department of pharmacy.
That said, it is important that the House does not lose sight of the UGC's reasons for recommending the closure of the department in the first place. It is generally agreed that there is a need to limit the number of those entering the profession in order to avoid the prospect of unemployment within the profession. Taxpayers' money spent on educating more pharmacists than are likely to find employment would not be money wisely spent. The UGC panel was aware when considering how best it might respond to the need to limit the overall output of graduates that closure of a school or department was one option and that there would be no volunteers for such a closure. There never are on such occasions. An assessment of relative

quality and a judgment on future provision had therefore to be made. The UGC did not make its recommendation lightly or without regard to the implications of the decision for the university. It knew that its recommendation would be unpopular, but, to its credit, it did not because of that shrink from its responsibility or from making its decision. I shall, of course, ensure that the chairman of the UGC is informed of the debate in advance of Thursday's decision.

Mr. Dalyell: The Minister used the phrase "generally agreed"—generally agreed by whom? When he talks about the numbers of graduates that may be needed, what about the demand of British industry? There is a considerable demand within industry for pharmacy graduates. Does the Minister's reply mean that the Government will never see an expansion in science-based industry? Is that what he is saying? Will the Minister answer the question?

Mr. Brooke: That question has arisen in the dialogue which the UGC has had both with the institution and with others. The UGC has made it clear that there is no logic in the expansion of pharmacy education if there are others in other disciplines who would be appropriate to industry's needs. The exercise involved a decision on what were the UGC's pharmacy requirements.

Mr. Robin Cook: Before the Minister reaches a final view, will he consult the Under-Secretary of State for Scotland with responsibility for Scottish industry, the hon. Member for Eastwood (Mr. Stewart)? He will find that one of the priorities of his Administration and the SDA is to promote the health-care industries for the central belt of Scotland, many of them being in my constituency adjacent to the Riccarton campus. From where are these industries to get the trained pharmacists if we lose the pharmacy department at Heriot-Watt, the one university that is oriented towards business, industry and commerce in Scotland?

Mr. Brooke: To be fair, I gave up time of my own in the debate to allow the maximum number of contributors—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twelve minutes past Twelve o'clock.